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Why It is Wise to Retain SBA Communications (SBAC) Stock Now
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SBA Communications Corporation (SBAC - Free Report) is seeing robust demand for its tower assets, as wireless service providers continue to enhance their wireless networks. However, a highly leveraged balance sheet limits the company’s ability to withstand any unexpected negative externalities in the future.
Increased innovation and adoption of data-driven mobile devices and applications such as machine-to-machine connections, social networking and streaming of video, and deployments of 5G networks will propel wireless carriers to expand their networks.
With a ramp-up in 5G-related investments, the timing of the C-Band spectrum activity from some large customers and initial leasing contributions from the Dish agreement, SBA Communications’ top line will see healthy growth.
Banking on the tailwinds, SBA Communications is focusing on portfolio-growth acquisitions. Over the years, the company has developed or acquired towers throughout Central and South America, and across Canada. Moreover, subsequent to the first-quarter 2021 end, it has purchased or agreed to purchase 413 communication sites for $110.2 million. The majority of the transaction will likely close by the end of third-quarter 2021 and aid the company to capitalize on the wireless use potential of the assets.
With operational strength and solid cash generating capability, the company enjoys flexibility with respect to its investment choices, share repurchases and dividend growth.
Furthermore, a robust balance-sheet position and operational strength make the company flexible enough to be opportunistic regarding investment choices, share repurchases and dividend growth.
However, the company has high customer concentration, with Verizon (VZ - Free Report) , AT&T (T - Free Report) and T-Mobile (TMUS - Free Report) accounting for the majority of its domestic site-leasing revenues. Therefore, loss of any of the customers or consolidation among them or a reduction in network spending will have a significant material impact on the company’s top line.
Besides, SBA Communications had $12.1 billion of total debt and leverage of 7.6X as of the first-quarter end. The first-quarter leverage ratio surpassed the company’s target of 7X-7.5X due to the Pacific Gas and Electric Company acquisition deal. Additionally, its debt-to-capital ratio is higher than the industry average. With this, the company is prone to negative externalities in the future.
Also, the company’s international footprint and geographic diversification expose it to adverse foreign currency translation impact. In fact, foreign exchange headwind negatively impacted first-quarter revenues by $12.6 million on a year-over-year basis.
Shares of this Zacks Rank #3 (Hold) company have gained 15.6% over the past six months, underperforming the industry's growth of 19.6%. Nonetheless, the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been revised 1.2% upward over the past two months. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Image Source: Zacks Investment Research
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Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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Why It is Wise to Retain SBA Communications (SBAC) Stock Now
SBA Communications Corporation (SBAC - Free Report) is seeing robust demand for its tower assets, as wireless service providers continue to enhance their wireless networks. However, a highly leveraged balance sheet limits the company’s ability to withstand any unexpected negative externalities in the future.
Increased innovation and adoption of data-driven mobile devices and applications such as machine-to-machine connections, social networking and streaming of video, and deployments of 5G networks will propel wireless carriers to expand their networks.
With a ramp-up in 5G-related investments, the timing of the C-Band spectrum activity from some large customers and initial leasing contributions from the Dish agreement, SBA Communications’ top line will see healthy growth.
Banking on the tailwinds, SBA Communications is focusing on portfolio-growth acquisitions. Over the years, the company has developed or acquired towers throughout Central and South America, and across Canada. Moreover, subsequent to the first-quarter 2021 end, it has purchased or agreed to purchase 413 communication sites for $110.2 million. The majority of the transaction will likely close by the end of third-quarter 2021 and aid the company to capitalize on the wireless use potential of the assets.
With operational strength and solid cash generating capability, the company enjoys flexibility with respect to its investment choices, share repurchases and dividend growth.
Furthermore, a robust balance-sheet position and operational strength make the company flexible enough to be opportunistic regarding investment choices, share repurchases and dividend growth.
However, the company has high customer concentration, with Verizon (VZ - Free Report) , AT&T (T - Free Report) and T-Mobile (TMUS - Free Report) accounting for the majority of its domestic site-leasing revenues. Therefore, loss of any of the customers or consolidation among them or a reduction in network spending will have a significant material impact on the company’s top line.
Besides, SBA Communications had $12.1 billion of total debt and leverage of 7.6X as of the first-quarter end. The first-quarter leverage ratio surpassed the company’s target of 7X-7.5X due to the Pacific Gas and Electric Company acquisition deal. Additionally, its debt-to-capital ratio is higher than the industry average. With this, the company is prone to negative externalities in the future.
Also, the company’s international footprint and geographic diversification expose it to adverse foreign currency translation impact. In fact, foreign exchange headwind negatively impacted first-quarter revenues by $12.6 million on a year-over-year basis.
Shares of this Zacks Rank #3 (Hold) company have gained 15.6% over the past six months, underperforming the industry's growth of 19.6%. Nonetheless, the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been revised 1.2% upward over the past two months. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>