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American Tower Corp. (AMT - Analyst Report) announced excellent financial results for the fourth quarter of 2011, easily surpassing the Zacks Consensus Estimates. Moreover, all the three reporting segments of the company generated year-over-year sales growth.
Fourth Quarter Highlights
On a GAAP basis, net income in the fourth quarter of 2011 was $201.3 million or 51 cents per share compared with a net income of $83.5 million or 21 cents per share in the prior-year quarter. Fourth quarter 2011 EPS of 51 cents was significantly above the Zacks Consensus Estimate of 31 cents.
Quarterly total revenue was $653.2 million, up 19.3% year over year and surpassed the Zacks Consensus Estimate of $651 million. Gross margin in the reported quarter was 74.7% compared with 75.7% in the year-ago quarter.
Agreements of Analysts
Of the 16 analysts covering the stock in the last 7 days, seven analysts revised their EPS estimates upward for the first quarter of 2012 while two reduced the same. Likewise, for the second quarter of fiscal 2012, out of 15 analysts, six raised the estimates but two analysts moved in the opposite direction.
For fiscal 2012, out of the 19 analysts, eight analysts increased the EPS estimate while four decreased the same. Similarly, for 2013, out of the 19 analysts, five analysts moved the estimates upward while two moved in the opposite direction.
Currently, the Zacks Consensus EPS Estimate for the first quarter of 2012 is pegged at 40 cents per share. The projected annual growth rate is 72.55%. Similarly, for the second quarter of fiscal 2012, the current Zacks Consensus EPS Estimate of 41 cents per share reflects a year-over-year growth of 41.61%.
Magnitude of Estimate Revisions
In synergy with the upward revision of estimates, the current Zacks Consensus Estimate, for the first quarter of 2012 was 4 cents above the previous estimate of 36 cents. Likewise, for the second quarter of 2012, the current Zacks Consensus Estimate increased by 2 cents from the earlier estimate of 39 cents.
For fiscal 2012, the current Zacks Consensus Estimate was 9 cents above the previous estimate of $1.58. However, for fiscal 2013, the current Zacks Consensus Estimate 11 cents above the previous estimate of $2.01.
With respect to earnings surprises during the last four quarters, the company has produced an average earnings surprise of negative 8.46% in the trailing four quarters. The ongoing and the next quarter contain an upside potential (essentially a proxy for future earnings surprises) of 0.00%. For fiscal 2012, the growth potential is 1.80% but fiscal 2013 has an upside potential of 0.00%.
We believe the wireless tower industry will continue to outperform primarily on the back of huge demand for mobile data and video services. Moreover, increased usage of smartphones and tablets coupled with huge deployment of 3G/LTE networks will increase the demand for data usage.
However, the recent development of satellite-delivered radio and video services could reduce the demand for tower-based broadcast transmission. Moreover, competition from other players like Crown Castle International Corp. (CCI - Analyst Report) along with higher operating expenses and a highly leveraged balance sheet will act as headwinds for the stock.
We maintain our long-term Neutral recommendation for American Tower Corp.Currently, the company has a Zacks#2 Rank, implying a short-term Buy rating.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that earnings estimate revisions are the most powerful force impacting stock prices. He turned this ground breaking discovery into two of the most celebrating stock rating systems in use today. The Zacks Rank for stock trading in a 1 to 3 month time horizon and the Zacks Recommendation for long-term investing (6+ months). These “Earnings Estimate Scorecard” articles help analyze the important aspects of estimate revisions for each stock after their quarterly earnings announcements. Learn more about earnings estimates and our proven stock ratings at: http://www.zacks.com/education/