How much a stock’s price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you’d invested in Equinix (EQIX – Free Report) ten years ago? It may not have been easy to hold on to EQIX for all that time, but if you did, how much would your investment be worth today?
Equinix’s Business In-Depth
With that in mind, let’s take a look at Equinix’s main business drivers.
Incorporated on Jun 22, 1998, Equinix, Inc. is a global digital infrastructure company. Its U.S. headquarters is in Redwood City, CA. The company has two more regional headquarters in Amsterdam and Hong Kong. It became a real estate investment trust (REIT) in taxable year 2015. In June, Equinix was included in the Fortune 500 list of the largest companies in the U.S.
Platform Equinix combines a global footprint of International Business Exchange or IBX data centers, interconnection solutions, and edge services for deploying network. It also includes unique business, digital ecosystems, and expert consulting and support.
The company operates in three reportable segments comprising the Americas, Middle East and Africa (EMEA) and Asia-Pacific geographic regions.
Through its 249 IBX data centers in 71 global markets across 32 countries, customers can directly inter-connect critical traffic exchange requirements. These customers rely on Equinix’s IBX centers for their critical interconnection relationships.
Equinix’s business is based on a recurring revenue model comprising colocation, related interconnection and managed IT infrastructure services. These services are considered to be recurring, as customers are billed at fixed rates on a recurring basis through the life of the respective contracts, which generally run for one to three years.
Non-recurring revenues comprise installation services related to initial deployment and professional services. Also, revenues from customer settlements (fees paid for terminating contracts before expiry) are treated as contract modifications. These services are typically billed only upon the completion of the installation or performance of services.
Note: All EPS numbers presented in this report represent FFO per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Equinix, if you bought shares a decade ago, you’re likely feeling really good about your investment today.
A $1000 investment made in November 2012 would be worth $3,619.04, or a 261.90% gain, as of November 21, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500’s rally of 191.59% and gold’s return of -2.75% over the same time frame.
Analysts are anticipating more upside for EQIX.
Shares of Equinix have outperformed the real estate market in the past six months. Its third-quarter results were driven by a steady rise in colocation and inter-connection revenues, marking the 79th consecutive quarter of top-line growth. Its global data-center portfolio is set to gain from the high demand for inter-connected data-center space, given the rise in enterprise cloud adoption and customers’ digital demand. Equinix focuses on acquisitions and developments to expand its data-center capacity in key markets. In October 2022, it revealed plans for a $74 million IBX data center in Jakarta to capitalize on the country’s growing digital needs. A solid balance sheet bodes well. However, stiff competition from industry peers could lead to aggressive pricing. Interest rate hikes and adverse foreign currency fluctuations add to its woes.
The stock has jumped 21.10% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 6 higher, for fiscal 2022; the consensus estimate has moved up as well.