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Here's Why You Should Retain Crown Castle (CCI) Stock Now
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The healthy wireless environment for tower space owing to investments in 5G and 4G densification is driving leasing activity for Crown Castle International Corp. (CCI - Free Report) . However, high customer concentration is likely to affect the company’s performance if its carriers tenants pullback or rationalize network spending.
Markedly, as data volume for wireless and wired network is growing rapidly amid the widespread adoption of smartphones and applications, the company’s customers continue to invest more in their networks to improve and densify their networks. As a provider of the underlying infrastructure that supports mobile connectivity, Crown Castle is witnessing strong demand for its tower and fiber assets.
In fact, this November, the company sealed a long-term lease agreement with DISH Network to rent out space to the latter on up to 20,000 of its communication towers and this will support DISH’s nationwide, first open, standalone and virtualized 5G network deployments. Additionally, Crown Castle’s carrier customers are ramping up 5G investments, while deploying additional spectrum. This is likely to boost demand and leasing for its tower space.
Moreover, capitalizing on these strong tailwinds, Crown Castle is making efforts to extend its communication infrastructure footprint. In fact, it is investing significantly in the fiber segment on the back of acquisitions as well as construction of small cells and fiber. It anticipates deployment of 10,000 small-cell nodes and similar activity level in 2021.
Additionally, a stable operating framework adds resilience to its business. In fact, the company has long-term (typically 5-15 year) tower lease agreements with top U.S. carriers, which contribute to recurring site rental cash flows over the long term. As of third-quarter end, the company had $23 billion remaining in contracted customer receivables.
However, tenant concentration is very high for Crown Castle. In fact, the top three among its customers, namely, Verizon, AT&T and T-Mobile, accounted for majority of its total revenues, of which AT&T contributes a handful amount of site rental revenues. Hence, loss of any of these customers or consolidation among them will significantly affect the company’s top line. Further, its performance is dependent on carrier spending, and hence any pullback or rationalization in network spending by tenants might affect Crown Castle’s performance.
Further, Crown Castle has a highly-leveraged balance sheet and significant amount of debt relative to its cash flows. Moreover, the company’s debt-to-equity ratio is significantly higher than the industry’s ratio. This limits its strength to withstand any credit crisis and unexpected negative externalities in the future.
CubeSmart’s (CUBE - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has moved up marginally to $1.66 in the past week. The company currently carries a Zacks Rank of 2 (Buy).
Extra Space Storage Inc’s (EXR - Free Report) FFO per share estimates for the current year have been revised marginally upward to $5.10 in the past week. The company carries a Zacks Rank of 2, currently.
City Office REIT, Inc.’s (CIO - Free Report) Zacks Consensus Estimate for ongoing-year FFO per share has moved 5.3% north to $1.20 in two months’ time. The company has a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Here's Why You Should Retain Crown Castle (CCI) Stock Now
The healthy wireless environment for tower space owing to investments in 5G and 4G densification is driving leasing activity for Crown Castle International Corp. (CCI - Free Report) . However, high customer concentration is likely to affect the company’s performance if its carriers tenants pullback or rationalize network spending.
Markedly, as data volume for wireless and wired network is growing rapidly amid the widespread adoption of smartphones and applications, the company’s customers continue to invest more in their networks to improve and densify their networks. As a provider of the underlying infrastructure that supports mobile connectivity, Crown Castle is witnessing strong demand for its tower and fiber assets.
In fact, this November, the company sealed a long-term lease agreement with DISH Network to rent out space to the latter on up to 20,000 of its communication towers and this will support DISH’s nationwide, first open, standalone and virtualized 5G network deployments. Additionally, Crown Castle’s carrier customers are ramping up 5G investments, while deploying additional spectrum. This is likely to boost demand and leasing for its tower space.
Moreover, capitalizing on these strong tailwinds, Crown Castle is making efforts to extend its communication infrastructure footprint. In fact, it is investing significantly in the fiber segment on the back of acquisitions as well as construction of small cells and fiber. It anticipates deployment of 10,000 small-cell nodes and similar activity level in 2021.
Additionally, a stable operating framework adds resilience to its business. In fact, the company has long-term (typically 5-15 year) tower lease agreements with top U.S. carriers, which contribute to recurring site rental cash flows over the long term. As of third-quarter end, the company had $23 billion remaining in contracted customer receivables.
However, tenant concentration is very high for Crown Castle. In fact, the top three among its customers, namely, Verizon, AT&T and T-Mobile, accounted for majority of its total revenues, of which AT&T contributes a handful amount of site rental revenues. Hence, loss of any of these customers or consolidation among them will significantly affect the company’s top line. Further, its performance is dependent on carrier spending, and hence any pullback or rationalization in network spending by tenants might affect Crown Castle’s performance.
Further, Crown Castle has a highly-leveraged balance sheet and significant amount of debt relative to its cash flows. Moreover, the company’s debt-to-equity ratio is significantly higher than the industry’s ratio. This limits its strength to withstand any credit crisis and unexpected negative externalities in the future.
Shares of this Zacks Rank #3 (Hold) company have gained 8.8% in the past yearagainst the industry’s decline of 4.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
CubeSmart’s (CUBE - Free Report) Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has moved up marginally to $1.66 in the past week. The company currently carries a Zacks Rank of 2 (Buy).
Extra Space Storage Inc’s (EXR - Free Report) FFO per share estimates for the current year have been revised marginally upward to $5.10 in the past week. The company carries a Zacks Rank of 2, currently.
City Office REIT, Inc.’s (CIO - Free Report) Zacks Consensus Estimate for ongoing-year FFO per share has moved 5.3% north to $1.20 in two months’ time. The company has a Zacks Rank of 2 at present.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.4% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>