Equinix Inc (NASDAQ: EQIX)

Sector: Real Estate Industry: REIT - Specialty CIK: 0001101239
Market Cap 93.20 Bn
P/B 6.58
P/E 69.03
P/S 10.11
ROIC (Qtr) 4.34
Div Yield % 1.97
Rev 1y % (Qtr) 7.03
Total Debt (Qtr) 22.73 Bn
Debt/Equity (Qtr) 1.61
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About

Investment thesis

Bull case

  • Robust tangible asset base of 32.84B provides 26.66x coverage of working capital 1.23B, indicating strong operational backing.
  • Strong free cash flow of (1.39B) provides 5.55x coverage of acquisition spending (251M), indicating disciplined M&A strategy.
  • Short-term investments of 1.50B provide solid 1.66x coverage of other current liabilities 904M, indicating strong liquidity.
  • Tangible assets of 32.84B provide robust 36.33x coverage of other current liabilities 904M, indicating strong asset backing.
  • Operating cash flow of 3.91B fully covers other non-current liabilities 983M by 3.98x, showing strong long-term stability.

Bear case

  • Operating cash flow of 3.91B barely covers its investment activities of (6.48B), with a coverage ratio of -0.60, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 3.91B provides thin coverage of dividend payments of (1.86B) with a -2.11 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.73B provide limited coverage of acquisition spending of (251M), which is -6.88x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of (1.39B) provides weak coverage of capital expenditures of 5.30B, with a -0.26 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 2.04B show weak coverage of depreciation charges of 2.07B, with a 0.99 ratio indicating high capital intensity and potential reinvestment needs.

Products and Services Breakdown of Revenue (2015)

Geographical Breakdown of Revenue (2015)

Peer comparison

Companies in the REIT - Specialty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 EQIX Equinix Inc 93.20 Bn 69.03 10.11 22.73 Bn
2 AMT American Tower Corp /Ma/ 84.92 Bn 69.21 11.41 45.01 Bn
3 DLR Digital Realty Trust, Inc. 61.15 Bn 48.23 10.00 19.66 Bn
4 CCI Crown Castle Inc. 37.84 Bn 64.24 6.91 29.58 Bn
5 IRM Iron Mountain Inc 32.10 Bn 222.02 4.65 18.73 Bn
6 SBAC Sba Communications Corp 25.39 Bn 332.98 15.54 15.02 Bn
7 WY Weyerhaeuser Co 19.35 Bn 59.73 2.80 5.57 Bn
8 LAMR Lamar Advertising Co/New 12.52 Bn 427.65 10.32 4.79 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.79 1.49
EV to Cash from Ops. EV/CFO 28.66 23.58
EV to Debt EV to Debt 4.93 2.74
EV to EBIT EV/EBIT 55.03 32.67
EV to EBITDA EV/EBITDA 28.64 18.09
EV to Free Cash Flow [EV/FCF] EV/FCF -80.42 66.87
EV to Market Cap EV to Market Cap 1.20 2.19
EV to Revenue EV/Rev 12.16 9.81
Price to Book Value [P/B] P/B 6.58 0.95
Price to Earnings [P/E] P/E 69.03 70.17
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.73 3.96
Dividend Payout Ratio % Div Payout % (Qtr) 136.00 112.65
Dividend per Basic Share Div per Share (Qtr) 18.76 3.59
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -131.73 187.43
Interest Coverage Int. cover (Qtr) 3.87 4.10
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -55.89 12.53
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -43.95 105.31
Dividend Growth (1y) % Div 1y % (Qtr) 10.09 27.11
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 52.19 44.10
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 17.22 -3.90
EBIT Growth (1y) % EBIT 1y % (Qtr) 42.15 45.16
EBT Growth (1y) % EBT 1y % (Qtr) 54.71 209.40
EPS Growth (1y) % EPS 1y % (Qtr) 61.48 198.65
FCF Growth (1y) % FCF 1y % (Qtr) -805.19 -130.11
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.00 5.54
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.23 0.20
Cash Payout Ratio Cash Payout (Qtr) 0.20 0.17
Cash Ratio Cash Ratio (Qtr) 0.44 0.30
Current Ratio Curr Ratio (Qtr) 1.32 0.62
Debt to Equity Ratio Debt/Equity (Qtr) 1.61 1.20
Interest Cover Ratio Int Coverage (Qtr) 3.87 4.10
Times Interest Earned Times Interest Earned (Qtr) 3.87 4.10
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 44.50 59.74
EBIT Margin % EBIT Margin % (Qtr) 22.10 40.99
EBT Margin % EBT Margin % (Qtr) 16.38 18.94
Gross Margin % Gross Margin % (Qtr) 51.10 65.41
Net Profit Margin % Net Margin % (Qtr) 14.60 14.71