Peer group price-to-FFO multiple
REITs are valued using price-to-FFO multiples, as this ratio makes multiple adjustments that help these REITs correctly determine their income. Equinix’s 3Q17 funds from operations stood at $4.97 per share. Its expected FFO was $4.11 for a surprise of ~20.9%.
EQIX has a price-to-FFO multiple of 17.1x. The peer group median is 14.3x while the peer group’s average is 15.0x, indicating that EQIX is trading at a premium. Its peer group consists of Digital Realty Trust (DLR), CoreSite Realty (COR), and Cyrus One (CONE).
Peer group’s EV-to-EBITDA multiples
EQIX has an EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 17.4x. which is higher than the peer group’s median and average of 15.7x and 15.8x, respectively.
Compared to its peer group, Equinix has a higher ratio supporting the price-to-FFO multiple and is trading at a premium valuation.
Peer group’s earnings per share
Equinix (EQIX) has TTM (trailing-12-months) earnings per share (or EPS) of $3.05. Among its peers, Digital Realty Trust (DLR) reported earnings per share of $1.24, CoreSite Realty (COR) reported EPS of $1.84, and Cyrus One (CONE) reported EPS of -$0.97.
Equinix comprises ~4.2% of the iShares Core US REIT ETF (USRT). It has a large portfolio and covers a variety of industries including healthcare, self-storage, and data centers.