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Here's Why You Should Hold American Tower in Your Portfolio
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On Oct 2, we issued an updated research report on Boston, MA-based, leading international wireless tower operator,American Tower Corp (AMT - Free Report) . Let’s have a look at the overall performance of the stock.
Price Performance
Over the last three months, the price performance of American Tower has been impressive. The stock has inched up 3.3%, outperforming the industry’s decline of 1.5% over the same time span.
When compared to the market at large, the stock’s performance looks depressing, as the S&P 500 index has rallied 3.6%, over the said time frame.
Considering the stable performance of the stock, we expect American Tower to scale higher in the coming quarters.
A Broker Favorite
We note that earnings estimates for American Tower have exhibited a healthy uptrend.
Over the last 90 days, the Zacks Consensus Estimate for earnings for third-quarter 2017 and fourth-quarter 2017 has moved up 0.6% to $1.67 per share and 0.6% to $1.70, respectively. The Zacks Consensus Estimate for fiscal 2017 has increased by 10 cents to $6.71.
Given the wealth of information at the disposal of brokers, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Estimates Trending Up
We note that the sales and Earnings Per Share (EPS) estimate for American Tower has moved up for the remaining quarters of 2017 and also for full-year 2017.
The sales growth for third-quarter 2017 and fourth-quarter 2017 is estimated to accelerate 10.9% and 10.4%, respectively. For 2017, sales is expected to surge 15.1%.
The EPS growth for third-quarter 2017 and fourth-quarter 2017 is estimated to accelerate 202.9% and 262%, respectively. For fiscal 2017, EPS is expected to soar 238.9%.
American Tower continues to benefit from increased investment of wireless carriers in 5G networks. Next-generation 4G LTE and 5G networks along with increased usage of smartphones and tablets are boosting demand for tower leasing. Additionally, the company’s increased investments in Asia are paying off.
We believe that the company’s tower buyouts in emerging markets have driven its top line and lent a competitive edge. American Tower’s Indian, EMEA and Latin American operations account for almost 50% of its organic core revenue growth. Notably, within the Property segment, revenues from the United States totaled $897 million (in second-quarter 2017), up 8.07% year over year. Meanwhile, total international revenues amounted $741 million, up 24.12% year over year. Within this, revenues from Asia totaled $295 million, increasing a whopping 31.11% year over year. EMEA revenues grossed $160 million, up 18.52% year over year. Latin America revenues totaled $287 million, up 21.09% year over year. The company’s total revenue from international business is likely to outperform revenues from the United States in the next three to seven years.
American Tower continues to generate most of its revenues from long-term (typically 5-10 year) tower leases with major wireless carriers. Further, the company provides on-site maintenance as well as servicing of antennas, amplifiers and base station equipment. The $100-million tower lease agreement with telecom behemoth AT&T Inc (T - Free Report) has helped American Tower to raise 2017 revenue guidance.
We are also impressed with American Tower’s efforts to reward stockholders with a quarterly cash distribution of 66 cents on shares of its common stock. The distribution will be paid on Oct 17, 2017 to stockholders of record at the closure of business on Sep 29, 2017.
All these above factors have also played a pivotal role in driving the company’s outlook.
Hiked Guidance
For 2017, American Tower anticipates property revenue to be $6,480-$6,580 million. Net income is expected to be $1,355-$1,405 million. Adjusted EBITDA is anticipated in the range of $4,045-$4,105 million. Consolidated AFFO is expected in the range of $2,835-$2,885 million.
Downturns
Customer concentration is very high for American Tower. The company’s major customers include AT&T, Sprint Nextel, T-Mobile and Verizon Wireless. They account for nearly 65% of American Tower’s quarterly revenues. The loss of any one of these customers or consolidations will have a significant material impact on the company’s top line.
Rapid expansion in the international markets, especially in the emerging Asian and Latin American markets increases revenues. Geographic diversification may jeopardize the bottom line as tower operations in the emerging markets are not as profitable as that in the mature U.S. market. Also, it increases the company’s exposure to foreign currency exchange rate risks.
Stiff competition, integration risks, rising operating expenses and a highly leveraged balance sheet act as major dampener to American Tower. In addition, the ongoing consolidation trend among telecom and cable TV operators may lead to serious financial fluctuation for the company in the to-be-reported quarter.
The company’s upcoming results also face threats from emerging technologies like Voice over WiFi (VoWiFi). Moreover, American Tower competes fiercely with tower operators like Crown Castle International Corp (CCI - Free Report) and SBA Communications Corp (SBAC - Free Report) .
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Here's Why You Should Hold American Tower in Your Portfolio
On Oct 2, we issued an updated research report on Boston, MA-based, leading international wireless tower operator,American Tower Corp (AMT - Free Report) . Let’s have a look at the overall performance of the stock.
Price Performance
Over the last three months, the price performance of American Tower has been impressive. The stock has inched up 3.3%, outperforming the industry’s decline of 1.5% over the same time span.
When compared to the market at large, the stock’s performance looks depressing, as the S&P 500 index has rallied 3.6%, over the said time frame.
Considering the stable performance of the stock, we expect American Tower to scale higher in the coming quarters.
A Broker Favorite
We note that earnings estimates for American Tower have exhibited a healthy uptrend.
Over the last 90 days, the Zacks Consensus Estimate for earnings for third-quarter 2017 and fourth-quarter 2017 has moved up 0.6% to $1.67 per share and 0.6% to $1.70, respectively. The Zacks Consensus Estimate for fiscal 2017 has increased by 10 cents to $6.71.
Given the wealth of information at the disposal of brokers, it is in the best interest of investors to be guided by broker advice and the direction of their estimate revisions. The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.
Estimates Trending Up
We note that the sales and Earnings Per Share (EPS) estimate for American Tower has moved up for the remaining quarters of 2017 and also for full-year 2017.
The sales growth for third-quarter 2017 and fourth-quarter 2017 is estimated to accelerate 10.9% and 10.4%, respectively. For 2017, sales is expected to surge 15.1%.
The EPS growth for third-quarter 2017 and fourth-quarter 2017 is estimated to accelerate 202.9% and 262%, respectively. For fiscal 2017, EPS is expected to soar 238.9%.
The upward estimate revisions reflect optimism over prospects of this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Catalysts Behind the Upsurge
American Tower continues to benefit from increased investment of wireless carriers in 5G networks. Next-generation 4G LTE and 5G networks along with increased usage of smartphones and tablets are boosting demand for tower leasing. Additionally, the company’s increased investments in Asia are paying off.
We believe that the company’s tower buyouts in emerging markets have driven its top line and lent a competitive edge. American Tower’s Indian, EMEA and Latin American operations account for almost 50% of its organic core revenue growth. Notably, within the Property segment, revenues from the United States totaled $897 million (in second-quarter 2017), up 8.07% year over year. Meanwhile, total international revenues amounted $741 million, up 24.12% year over year. Within this, revenues from Asia totaled $295 million, increasing a whopping 31.11% year over year. EMEA revenues grossed $160 million, up 18.52% year over year. Latin America revenues totaled $287 million, up 21.09% year over year. The company’s total revenue from international business is likely to outperform revenues from the United States in the next three to seven years.
American Tower continues to generate most of its revenues from long-term (typically 5-10 year) tower leases with major wireless carriers. Further, the company provides on-site maintenance as well as servicing of antennas, amplifiers and base station equipment. The $100-million tower lease agreement with telecom behemoth AT&T Inc (T - Free Report) has helped American Tower to raise 2017 revenue guidance.
We are also impressed with American Tower’s efforts to reward stockholders with a quarterly cash distribution of 66 cents on shares of its common stock. The distribution will be paid on Oct 17, 2017 to stockholders of record at the closure of business on Sep 29, 2017.
All these above factors have also played a pivotal role in driving the company’s outlook.
Hiked Guidance
For 2017, American Tower anticipates property revenue to be $6,480-$6,580 million. Net income is expected to be $1,355-$1,405 million. Adjusted EBITDA is anticipated in the range of $4,045-$4,105 million. Consolidated AFFO is expected in the range of $2,835-$2,885 million.
Downturns
Customer concentration is very high for American Tower. The company’s major customers include AT&T, Sprint Nextel, T-Mobile and Verizon Wireless. They account for nearly 65% of American Tower’s quarterly revenues. The loss of any one of these customers or consolidations will have a significant material impact on the company’s top line.
Rapid expansion in the international markets, especially in the emerging Asian and Latin American markets increases revenues. Geographic diversification may jeopardize the bottom line as tower operations in the emerging markets are not as profitable as that in the mature U.S. market. Also, it increases the company’s exposure to foreign currency exchange rate risks.
Stiff competition, integration risks, rising operating expenses and a highly leveraged balance sheet act as major dampener to American Tower. In addition, the ongoing consolidation trend among telecom and cable TV operators may lead to serious financial fluctuation for the company in the to-be-reported quarter.
The company’s upcoming results also face threats from emerging technologies like Voice over WiFi (VoWiFi). Moreover, American Tower competes fiercely with tower operators like Crown Castle International Corp (CCI - Free Report) and SBA Communications Corp (SBAC - Free Report) .
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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