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SBA Communications (SBAC) Up 13.3% in 3 Months: Will This Last?
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Shares of SBA Communications (SBAC - Free Report) have risen 13.3% over the past three months compared with the industry's upside of 12.4%.
Last month, SBAC reported second-quarter 2024 adjusted funds from operations (AFFO) per share of $3.29, which beat the Zacks Consensus Estimate by a whisker. Results reflected a decent improvement in site leasing revenues. However, lower revenues posted by site development hurt the results to some extent.
Analysts also seem bullish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2024 FFO per share revised upward over the past month to $13.22.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price and check whether this trend will last or not.
SBA Communications’ extensive and geographically diverse wireless communication infrastructure portfolio is well-positioned to gain from wireless carriers’ high capital spending for network expansion amid the growing mobile data usage and accelerated 5G network deployment efforts.
SBA Communications has a resilient and stable site-leasing business model. The company generates most of its revenues from long-term (typically five to 10 years) tower leases that have built-in rent escalators. With high operating margins, its tower-leasing business remains attractive.
SBA Communications also offers wireless service providers assistance in developing and maintaining their own networks. The company’s services include site identification and acquisition as well as obtaining zoning approvals and permitting networks representing all technologies.
It also provides a broad range of cell site equipment installation, optimization and integration services. SBA Communications’ extensive site development experience will propel its growth over the long term.
SBA Communications continues to expand its tower portfolio and seek growth opportunities. During the six months ended Jun 30, 2024, the company acquired 128 towers and related assets. In the second quarter of 2024, it also built 100 towers. Such portfolio expansion efforts will position SBA Communications to leverage secular trends in mobile data usage and wireless spending growth worldwide.
Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and SBA Communications remains committed to that. The company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 22.42%. Given SBA Communications’ decent financial position and a lower-than-industry dividend payout rate, the dividend distribution is expected to be sustainable over the long run.
However, the high customer concentration and the ongoing consolidation in the wireless industry are concerns for the company’s top-line growth. Elevated interest rates add to the company’s woes.
The Zacks Consensus Estimate for Essex Property Trust’s 2024 FFO per share is pegged at $4.82, up 3.26% year over year.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share is pegged at $2.66, up 1.53% year over year.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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SBA Communications (SBAC) Up 13.3% in 3 Months: Will This Last?
Shares of SBA Communications (SBAC - Free Report) have risen 13.3% over the past three months compared with the industry's upside of 12.4%.
Last month, SBAC reported second-quarter 2024 adjusted funds from operations (AFFO) per share of $3.29, which beat the Zacks Consensus Estimate by a whisker. Results reflected a decent improvement in site leasing revenues. However, lower revenues posted by site development hurt the results to some extent.
Analysts also seem bullish on this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2024 FFO per share revised upward over the past month to $13.22.
Image Source: Zacks Investment Research
Let us decipher the factors behind the surge in the stock price and check whether this trend will last or not.
SBA Communications’ extensive and geographically diverse wireless communication infrastructure portfolio is well-positioned to gain from wireless carriers’ high capital spending for network expansion amid the growing mobile data usage and accelerated 5G network deployment efforts.
SBA Communications has a resilient and stable site-leasing business model. The company generates most of its revenues from long-term (typically five to 10 years) tower leases that have built-in rent escalators. With high operating margins, its tower-leasing business remains attractive.
SBA Communications also offers wireless service providers assistance in developing and maintaining their own networks. The company’s services include site identification and acquisition as well as obtaining zoning approvals and permitting networks representing all technologies.
It also provides a broad range of cell site equipment installation, optimization and integration services. SBA Communications’ extensive site development experience will propel its growth over the long term.
SBA Communications continues to expand its tower portfolio and seek growth opportunities. During the six months ended Jun 30, 2024, the company acquired 128 towers and related assets. In the second quarter of 2024, it also built 100 towers. Such portfolio expansion efforts will position SBA Communications to leverage secular trends in mobile data usage and wireless spending growth worldwide.
Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and SBA Communications remains committed to that. The company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 22.42%. Given SBA Communications’ decent financial position and a lower-than-industry dividend payout rate, the dividend distribution is expected to be sustainable over the long run.
However, the high customer concentration and the ongoing consolidation in the wireless industry are concerns for the company’s top-line growth. Elevated interest rates add to the company’s woes.
Stocks to Consider
Some better-ranked stocks from the REIT sector are Essex Property Trust (ESS - Free Report) and Cousins Properties (CUZ - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Essex Property Trust’s 2024 FFO per share is pegged at $4.82, up 3.26% year over year.
The Zacks Consensus Estimate for Cousins Properties’ 2024 FFO per share is pegged at $2.66, up 1.53% year over year.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.