Global Self Storage has generated attractive performance so far this year.
The company’s overall trend of growth continues and the long-term prospects for the firm should be appealing.
Shares aren’t exactly cheap, but they are certainly affordable.
Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More »
imaginima/iStock via Getty Images REITs have long been a staple of the investment community. This is especially true of investors who are interested in attracting consistent income. It is worth noting, however, that not all REITs are equally appealing. Some pay out more than others relative to the price that investors pay. And some are healthier or more interesting than others. Often, in search of more attractive prospects, investors will look for smaller companies in the space they are interested in. While these carry more risk, all things being the same, they also are likely to be the most overlooked. One such prospect that came across my radar earlier this year is Global Self Storage ( SELF ). Though shares are not exactly cheap, they definitely don’t look bad either. And with this year turning out to be a good year, it might make for a solid prospect for investors who want a small and attractive company to hold for the long run. Recent developments are encouraging
In the last article that I wrote about Global Self Storage, I came out as bullish and said that the company should be considered a solid prospect for investors. Since then, the company has returned 8.2% for investors, which is good but is worse than the 12.6% return for the S&P 500. In the years leading up to the pandemic, the company exhibited attractive growth, though shares were not particularly cheap at the time I wrote my piece. Even throughout the pandemic, revenue continued expanding, rising by 6.1% over the $8.67 million the company generated in 2019 to $9.20 million last year.
Cash flow at the company has been fairly consistent, bouncing around in a narrow range of between $1.71 million and $2.28 million. FFO, or funds from operations, rose but did so inconsistently. The same could be said of the adjusted equivalent of this. EBITDA exhibited similar bumpy growth. Though this inconsistency may be undesirable to some investors, the overall trend for the business has been a net positive. *Created by Author
Since the publication of my article, the company has demonstrated that growth has not stopped. In the first three quarters of 2021, revenue came in at $7.75 million. This represents an increase of 13.6% over the $6.82 million the company generated in the first three quarters of 2020. Revenue growth in the third quarter of 2021 was particularly strong, coming in at 16.4% as revenue rose from $2.35 million to $2.73 million. Not only did the company benefit from stronger pricing according to management, they also benefited from a rise in the occupancy rate. Across its 13 properties totaling 7,010 units, the company saw its occupancy rate total 93.5% recently. This compares to the 91.9% reported at the end of the third quarter of 2020. With any company that is asset intensive, a small improvement in occupancy can have a big impact on the bottom line.
Such has been the case so far this year. In the first nine months of 2021, operating cash flow totaled $2.53 million. That compares favorably to the $1.22 million achieved in the first half of 2020. FFO experienced a similar increase, rising by 59.8% from $1.46 million in the first nine months of 2020 to $2.33 million the same period this year. On an adjusted basis, this increase was 58%, having risen from $1.57 million to $2.48 million. And EBITDA increased from $2.39 million to $3.25 million. That is an increase of 35.9% year over year. *Created by Author
All of this is great news, but the question is what shares might be worth moving forward. If, for instance, we assume that the company is priced relative to results achieved in 2020, shares look rather lofty. The business should be trading at a price to operating cash flow multiple of 28.3 and it would be trading at a price to FFO multiple of 26.9. The adjusted equivalent of this would be 25.2, while the EV to EBITDA multiple would stand at 22.3. Fortunately, there’s no evidence that this year will turn out any weaker in the final quarter than it did in the […]