Equinix (EQIX) Down 11.1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Equinix (NASDAQ:EQIX). Shares have lost about 11.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Equinix due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Equinix Q4 FFO Surpasses Estimates, Revenues Meet

Equinix posted mixed results for fourth-quarter 2019, wherein AFFO per share surpassed the Zacks Consensus Estimate, while revenues were in line. Nonetheless, both AFFO and revenues improved year over year.

The company’s quarterly AFFO per share was $5.51, beating the Zacks Consensus Estimate of $5.36. The figure also improved from the year-ago quarter’s $5.13. The upside primarily stemmed from robust top-line growth and solid operating performance.

For 2019, AFFO per share was $22.81, up from $20.69 recorded in 2018. The reported figure surpassed the Zacks Consensus Estimate of $22.65 per share. Revenues were $5.56 billion for the full-year, up from $5.07 billion recorded in 2018. The reported figure was in line with the Zacks Consensus Estimate.

Quarter in Detail

Total quarterly revenues were $1.42 billion, in line with the Zacks Consensus Estimate. The top-line figure improved 8.2% year over year.

Recurring revenues were $1.34 billion, up 8.8% from the year-ago quarter’s figure. Non-recurring revenues declined marginally from the year-ago quarter to $79.2 million.

Revenues from the three geographic regions increased on a year-over-year basis as well. Revenues from the Americas, EMEA and the Asia Pacific jumped 2.4%, 15.1% and 11.5% to $653.7 million, $463.8 million and $299.7 million, respectively.

Cash gross margin was 66%, stable year over year. Total operating expenses were up 2.7% year over year to $378.5 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $675.9 million, up 9.5% year over year. Adjusted EBITDA margins were 48%, up from 47% recorded in the prior-year quarter. AFFO appreciated 14.1% year over year to $472.6 million in the December-end quarter.

Balance Sheet

Equinix exited the fourth quarter with cash and cash equivalents of $1.9 billion. The company’s total debt principal outstanding was $11.9 billion as of Dec 31, 2019.

Guidance

For 2020, the company estimates generating revenues of $6.000-$6.050 billion. It predicts adjusted EBITDA of $2.858-$2.908 billion and AFFO of $2.108-$2.158 billion. Further, AFFO per share is estimated to lie between $24.42 and $25.00.

For first-quarter 2020, Equinix projects revenues of $1.450-$1.460 billion. Adjusted EBITDA is likely to lie between $686 million and $696 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Equinix has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Equinix has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.