Public Storage (PSA): what the price requires
At today's price, Public Storage (PSA) is priced for +5.3% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/PSA
Headline
| Field | Value |
|---|---|
| Ticker | PSA |
| Company | Public Storage |
| Current price | $320.73/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | reit |
| Implied FFO growth | 5.3% |
| Price-to-FFO | 20.5x |
| FFO yield | 4.9% |
Solve inputs: computed at a 9.1% cost of equity with 4% terminal growth over a 5-year stage; each 1pp of cost of equity moves the implied growth ~4.6pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.18σ |
| cohort percentile (of 88 peers) | 78 |
| sustained it ~5 years at this level | 68% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.37x | 5 | expensive |
| Earnings | 2.08x | 3 | expensive |
| Relative | 1.83x | 6 | expensive |
| Growth | 1.09x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $294.78 | 1.09x | yes | FCF base $3.2B, growth 3% (input: historical growth), terminal g 2.9%, WACC 8.0%, 5yr projection |
| DCF Exit Multiple | Growth | $303.47 | 1.06x | yes | Exit EV/EBITDA: 38.4x / 40.4x / 42.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $371.31 | 0.86x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 29.6x / 35.0x / 40.4x (bear / base = reference held flat / bull), EV/EBITDA 26.12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $116.93 | 2.74x | yes | BV/sh $52.43, ROE (TTM) 20.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $173.05 | 1.85x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $156.31 | 2.05x | yes | Rev $4.9B, growth 3% (input: historical growth; tapered), Terminal P/S: 6.8x / 8.0x / 9.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $186.96 | 1.72x | yes | FFO/share $15.58, growth 2% (input: historical FFO/share growth, 10y median), PEG=17.85 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $0.01 | 32073.00x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.19B × (1−0%) / WACC 8.0% → EPV (no growth) (excluded from median) |
| Residual Income | Asset | $165.87 | 1.93x | yes | BV $52.43 + 5yr PV of (ROE (TTM) 20.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $135.57 | 2.37x | yes | √(22.5 × FFO/share $15.58 × BVPS $52.43) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $131.36 | 2.44x | yes | EBITDA $1.63B × sector EV/EBITDA 20.0x |
| FCF Yield | Earnings | $140.76 | 2.28x | yes | FCF $3176.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $154.38 | 2.08x | yes | FFO/share $15.58 × (8.5 + 2×1.7%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $16.46 | 19.49x | yes | BV $52.43 × (ROIC 2.5% / WACC 8.0%) |
| P/Sales Sector | Relative | $165.70 | 1.94x | yes | Revenue $4.86B × sector P/S 6.0x |
| PEG Fair Value | Relative | $77.90 | 4.12x | yes | FFO/share $15.58 × (PEG 1.5 × growth 1.7% (input: historical FFO/share growth, 10y median)) → PE 2.5x |
| Earnings Yield | Earnings | $168.43 | 1.90x | yes | FFO/share $15.58 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | $220.96 | 1.45x | yes | FFO/share $15.58 × 14.2x P/FFO (route cohort median, n=85); FFO $2.74B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 176M |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt (REIT basis) | $9.6b |
| Net debt / FFO | 3.49x |
| Fixed-charge coverage (FFO basis) | 10.0x |
| Funds from operations (trailing) | $2.7b |
| Share count CAGR (buyback) | -0.1% |
| Burning cash | no |
REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other.
Bullet Takeaways
- At about $318 the REIT trades near 21.5 times adjusted funds from operations and implies roughly 5.3% annual growth in that cash measure. That pace is within what Public Storage has delivered, so the price is broadly reasonable rather than stretched.
- The balance sheet is built for durability. Net debt is about 3.5 times funds from operations and fixed-charge coverage is near 10 times, which is conservative for a REIT of this size.
- The defining near-term event is a $10.5 billion all-stock acquisition of National Storage Affiliates. First-quarter 2026 core FFO was $4.22 per share, occupancy ticked up to 91.5%, and management reaffirmed full-year core FFO guidance of $16.35 to $17.00.
Bull Case
The loudest worry on Public Storage is that self-storage is a maturing, low-growth business where same-store revenue has gone flat, so start there and ask whether the data supports the fear. It partly does and partly does not. First-quarter same-store revenue was roughly flat and net operating income up only 0.4%, which confirms the top-line has cooled. But occupancy actually improved, ticking up to 91.5% from 91.1% a year earlier, and core FFO still grew to $4.22 per share. The price implies about 5.3% growth in adjusted funds from operations, a pace the trust has delivered before. So the fear is real on same-store growth, yet the company is still compounding cash earnings and the price is not asking for a reacceleration, only for steadiness.
The structural case is scale in a fragmented market. Public Storage is the largest owner of self-storage facilities, and the 10-K states plainly that ownership of these facilities "is highly fragmented" and that as the largest owner "we believe that we own approximately 9%" of the market (FY2025 10-K, accession 0001628280-26-007696). A 9% share of a fragmented category is a long runway for a consolidator with the lowest cost of capital and the strongest brand. That scale shows up in operating leverage, marketing efficiency, and the ability to buy growth, which the company has done aggressively: since the start of 2023 it "acquired a total of 273 facilities with 19.9 million net rentable square feet for $3.9 billion" (accession 0001628280-26-007696).
The balance sheet and the deal pipeline are what make the bull case durable. Net debt sits near 3.5 times funds from operations with fixed-charge coverage close to 10 times, conservative leverage that gives Public Storage room to act when others cannot. The $10.5 billion all-stock acquisition of National Storage Affiliates is exactly that move, consolidating a large portfolio into the lowest-cost operator while preserving the balance sheet by using stock. For an income-oriented holder, a well-covered dividend funded by stable, inflation-resilient cash flows, plus an external growth engine, is the combination that justifies paying a premium multiple to book.
Bear Case
The competitive pressure that matters for Public Storage is supply, and it comes from a crowd of operators that can build into the same submarkets. The company itself describes a business where ownership "is highly fragmented" (FY2025 10-K, accession 0001628280-26-007696), which cuts both ways: it gives Public Storage room to consolidate, but it also means thousands of local and regional operators, plus large peers like Extra Space and CubeSmart, competing for the same customers. Self-storage has low barriers to new construction in many markets, so when rents rise, developers respond, and the resulting supply caps pricing power. The flat same-store revenue and 0.4% net operating income growth in the first quarter are the visible result of that dynamic. A business whose pricing engine has stalled is a business where the next leg of growth must be bought, not earned organically.
The static valuation frames read the price as full. Asset value, earnings power, and peer multiples all sit below the current quote; only the growth-DCF reaches it. The reasonable-growth band built from the inversion centers near $357, not far above today's $318 (June 27, 2026), so there is some support, but the price already credits the trust with steady mid-single-digit funds-from-operations growth. If same-store trends stay soft and the acquisition pipeline does not add enough per-share growth to compensate, the multiple has little room to expand and could compress.
The acquisition itself carries the near-term risk. A $10.5 billion all-stock deal for National Storage Affiliates is large, and all-stock deals dilute existing holders if the shares are not richly valued at signing. Integration of a big portfolio takes time, the acquired assets carry their own occupancy and rate trajectories, and the math only works if the combined entity grows per-share funds from operations rather than just gross funds from operations. Rising interest rates also weigh on REIT valuations broadly, since storage cash flows compete with bond yields for income investors. The 10-K notes that headline rent figures do "not reflect the impact of promotional discounts" (accession 0001628280-26-007696), a reminder that the realized economics can lag the asking rates, which matters when the company is leaning on a soft same-store backdrop while absorbing a major acquisition.
Valuation
Public Storage is valued the way a REIT should be, off adjusted funds from operations rather than an operating multiple, because that cash measure is what the trust can actually pay out and reinvest. At about $318 the price is near 21.5 times adjusted funds from operations and implies growth in that measure of roughly 5.3% a year, computed at a 9.1% cost of equity with 4% terminal growth over a five-year stage. That assumed pace is within what Public Storage has delivered, and against peers the price-to-adjusted-funds-from-operations is not an outlier, so the inversion reads the overall priced-in level as within range.
The family pattern shows a quality premium. The asset, earnings-power, and peer-multiple frames all sit below the current price, while the growth-DCF reaches it. For the largest, lowest-cost operator in a fragmented category, that gap is the durability premium the market assigns to a brand and balance sheet the static methods cannot fully capture. The reasonable-growth band runs from a low near $317 to a base around $357 and a high near $402, which puts the current price at the bottom of its own fair band rather than above it.
The balance sheet supports the read. Net debt near 3.5 times funds from operations and fixed-charge coverage close to 10 times are conservative, which lowers the risk that leverage forces a bad decision and gives the trust capacity to fund the National Storage Affiliates deal. The honest framing is that a buyer at this price is underwriting steady mid-single-digit cash-flow growth from a dominant operator, accepting that same-store trends are currently soft, and counting on scale and acquisitions to carry the per-share growth the price assumes.
Catalysts
The defining catalyst is the $10.5 billion all-stock acquisition of National Storage Affiliates. The deal consolidates a large portfolio into the lowest-cost operator, and its progress, the closing timeline, the eventual accretion to per-share funds from operations, and the integration execution will drive the stock more than any single quarter. Management reaffirmed full-year 2026 core FFO guidance of $16.35 to $17.00 per share even while absorbing the transaction, which signals confidence in the combined cash flows.
The operating cadence is steadier. First-quarter 2026 core FFO of $4.22 per share beat expectations, occupancy improved to 91.5% from 91.1% a year earlier, and same-store revenue was flat with net operating income up 0.4%. Management flagged that revenue growth could soften mid-year on lagging indicators, so the next earnings reports are the checkpoints for whether same-store trends stabilize or weaken. Any move in the dividend, supported by stable funds from operations, is a catalyst for the income-focused holder.
The risks track the macro and the supply cycle. Interest-rate moves affect both the REIT's valuation and the appeal of its yield against bonds. New self-storage construction in key markets can cap pricing power, and a softer consumer or housing market reduces the moving-and-storing demand that fills units. The acquisition adds execution and dilution risk on top, so a stumble in integration or a deterioration in same-store rates would weigh on a stock that is already priced for steady, not spectacular, growth.
Peer Cohorts (Per Segment, With Filing Citations)
Self-Storage Operations (reported)
- EXR (Extra Space Storage Inc.)
- (no filing in the citation store)
- NSA (National Storage Affiliates Trust)
- (no filing in the citation store)
- SMA (SmartStop Self Storage REIT, Inc.)
- (no filing in the citation store)
- STAG (STAG Industrial, Inc.)
- (no filing in the citation store)
- VNO (VORNADO REALTY TRUST)
- (no filing in the citation store)
- BRX (Brixmor Property Group Inc.)
- (no filing in the citation store)
- KIM (KIMCO REALTY CORPORATION)
- (no filing in the citation store)
- AMH (American Homes 4 Rent)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.