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What to Expect From American Tower (AMT) in Q4 Earnings?

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American Tower Corp. (AMT - Free Report) is scheduled to release fourth-quarter and 2020 results before the opening bell on Feb 25. The company’s results are expected to reflect year-over-year increases in revenues and funds from operations (FFO) per share.

In the last reported quarter, the operator of wireless communications towers surpassed adjusted funds from operations (AFFO) estimates by 7.2%. The company witnessed strong organic tenant billing growth. Moreover, robust revenue growth in the Africa and Europe property segments supported the top-line improvement.

Over the trailing four quarters, it surpassed estimates on all four occasions, the average surprise being 3.69%.

American Tower Corporation Price and EPS Surprise


American Tower Corporation Price and EPS Surprise

American Tower Corporation price-eps-surprise | American Tower Corporation Quote

Let’s see how things have shaped up prior to this announcement.

In September 2020, American Tower secured a master lease agreement with its tenant T-Mobile US, Inc. (TMUS - Free Report) . The lease is expected to have provided American Tower with revenue-growth visibility and is likely to increase its straight-line revenues, thereby, boosting property revenues and adjusted EBITDA.

Other than this, the company’s resilient and stable business model, consisting of built-in escalators on all its leases, is likely to support its revenue growth in the fourth quarter.

Also, U.S. carriers are expected to have continued to deploy network capital to upgrade and densify networks. As providers of the underlying infrastructure that supports such upgradation, American Tower is likely to have enjoyed strong leasing activity in the quarter under consideration.

Further, the company is likely to have reaped benefits from its investment efforts in a number of international locations as its international business is witnessing comparatively faster growth than its U.S. business. 

In fact, focus on macro-tower investment opportunities during the prior quarter is likely to have propelled the company to grow its tenancy and organic tenant billings during the October-December period.

The Zacks Consensus Estimate for fourth-quarter 2020 revenues is pegged at $2.06 billion, indicating a rise of 7.2% from the year-ago reported figure. This is expected to have been supported by growth in its property segment’s revenues. In fact, the Zacks Consensus Estimate for the property segment’s revenues is pinned at $2.02 billion, indicating growth of 5.4% from the prior year’s reported figure.

However, the decommissioning of sites due to the merger between Sprint and T-Mobile U.S. Inc. is expected to have affected the company’s fourth-quarter performance.

American Tower’s activities during the quarter were inadequate to gain adequate analyst confidence. Notably, the Zacks Consensus Estimate for fourth-quarter FFO per share has been unchanged at $2.08 over the past month. Nonetheless, it suggests a year-over-year increase of 6.7%.

For the year, the Zacks Consensus Estimate for FFO per share has been revised marginally upward to $8.44 over the past month. The figure, however, suggests a 9.2% year-over-year increase. Revenues are projected to soar 5.4% year over year to $7.99 billion.

For 2020, American Tower anticipates property revenues of $7,855-$7,915 million, indicating a year-over-year improvement of 5.6% at the mid-point. Consolidated AFFO is estimated to be $3,720-$3,770 million, suggesting a year-over-year mid-point expansion of 6.4%.

Key Developments During Q4

In late December, American Tower announced the closure of its InSite Wireless Group, LLC. acquisition for a total consideration of $3.5 billion, including debt. The deal is projected to be immediately accretive.

Precisely, the acquired entity, which owned, operated and managed around 3,000 communications sites, mainly in the United States and Canada, is likely to generate roughly $150 million in property revenues and around $115 million in gross margin in 2021, per management.

Here is what our quantitative model predicts:

American Tower has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for American Tower is +7.49%.

Zacks Rank: American Tower currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks That Warrant a Look

Here are a few other stocks in the REIT sector that you may want to consider, as our model shows that these too have the right combination of elements to report a positive surprise this quarter:

Public Storage (PSA - Free Report) , slated to release earnings figures on Feb 24, has an Earnings ESP of +0.53% and a Zacks Rank of 3, currently.

CubeSmart (CUBE - Free Report) , scheduled to announce fourth-quarter results on Feb 25, has an Earnings ESP of +0.69% and a Zacks Rank of 3, 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.

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