Crown Castle International Inc. ( CCI - Analyst Report ) is slated to release its third-quarter 2012 results on Wednesday, October 24, after the closing bell. The current Zacks Consensus Estimate for the third quarter is pegged at 14 cents, representing a decline of 3.53% from the year ago quarter.

With respect to earnings surprise, Crown Castle has outperformed the Zacks Consensus Estimate in all the last four quarters with an average beat of 11.15%

Second-Quarter Performance

On July 25, 2012, CCI declared its financial results for the second quarter of fiscal 2012 beating the Zacks Consensus Estimates. Quarterly GAAP net income was approximately $116 million or 40 cents per share compared with a net income of $25.7 million or 9 cents per share in the year-ago quarter. Second-quarter 2012 earnings per share of 40 cents surpassed the Zacks Consensus Estimate by a penny.

Net revenue in the reported quarter was $585.5 million, up 17% year over year, easily beating the Zacks Consensus Estimate of $521 million. This growth was primarily attributable to improved performance in the Site Rental segment.

Gross margin in the reported quarter was 70.7% compared with 70.6% in the year-ago quarter. Operating income was $203 million compared with $167.1 million in the prior-year quarter.

Agreement of Estimate Revisions

In the last 30 days, one out of 17 estimates was revised downward for the third quarter. Similarly, for the fourth quarter, 2 out of 16 estimates moved south.

For 2012, in the last 30 days, 2 out of 18 estimates were revised downward, while only one moved in the opposite direction. For 2013, the estimate revision pattern was same as 2012.

Magnitude of Estimate Revisions

Over the last 30 days, the Zacks Consensus Estimate has decreased by a penny to 14 cents for the third quarter of 2012. Similarly, the estimate has decreased by a penny to 15 cents for the fourth quarter of 2012.

For 2012, in the last 30 days, the Zacks Consensus Estimate has declined by a penny to 87 cents for the third quarter of 2012. However, the estimate deteriorated by 4 cents to $1.12 for 2013.

Our Take

Recent acquisition of 7200 T-Mobile towers make Crown Castle the largest wireless tower operator in the U.S. ahead of arch rival American Tower Corporation ( AMT - Analyst Report ) . The acquisition will also enable Crown Castle to improve both its top and bottom line. We believe significant growth of wireless broadband, higher usage of smartphones and tablets together with increased deployment of 4G LTE networks will boost the demand for the company’s towers going forward. Acquiring privately held NextG Networks Inc. has placed Crown Castle as the leading provider of Distributed Antenna Systems (DAS), which is rapidly becoming a complementary solution to the large wireless tower system. Additionally the company’s tenancy ratio is just 1.25 which provides significant scope for Crown Castle to add more customers without incurring additional capital expenditure.

In view of the above mentioned positives we are maintaining our long-term Outperform recommendation on Crown Castle. However, the company holds a Zacks #3 Rank, implying a short-term Hold rating on the stock.