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SBA Communications (SBAC) Up 10.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for SBA Communications (SBAC - Free Report) . Shares have added about 10.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SBA Communications due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
SBA Communications Tops on Q4 AFFO & Revenues
SBA Communications delivered solid fourth-quarter 2020 results, wherein adjusted FFO (AFFO) and the top line increased year over year as well as surpassed the Zacks Consensus Estimate.
The AFFO per share of $2.49 for the fourth quarter surpassed the Zacks Consensus Estimate of $2.44. Further, the reported figure is 14.2% higher than the prior-year quarter’s $2.18.
Results reflected solid operating performance in both its site leasing and development business. The company continues to benefit from the addition of sites to its portfolio.
Quarterly total revenues increased 4.3% year over year to $535.9 million and outpaced the consensus estimate of $529.8 million.
The company also announced a new long-term master lease agreement with DISH Network Corporation, per which the latter will lease SBA Communications’ towers. Moreover, SBA Communications is expected to provide a wide array of pre-construction functions such as site acquisition as well as regulatory and compliance services.
Quarter in Detail
Site-leasing revenues were up 2.5% year over year to $493 million. This consisted of domestic site-leasing revenues of $393 million and international site-leasing revenues of $100 million. Domestic cash site-leasing revenues were $391.9 million, up 3.8% year over year. International cash site-leasing revenues were $100.9 million, up 0.5% year over year. Site-leasing operating profit summed $399.3 million, marking an increase of 3.4% year over year. Also, site development revenues jumped 31.9% to $43 million.
Overall operating income improved to $165.1 million from the year-ago quarter’s $153.9 million.
Adjusted EBITDA totaled $380.6 million, up 5% year over year, while adjusted EBITDA margin remained flat year over year at 71%.
During the December-end quarter, the company acquired 104 communication sites for a total cash consideration of $133.5 million. It also built 106 towers during this period. The company owned or operated 32,923 communication sites as of Dec 31, 2020. Of these, 16,546 sites are located in the United States and its territories, and 16,377 internationally.
SBA Communications also spent $16.4 million to purchase land and easements, and extend lease terms. Markedly, total cash capital expenditure was $104.7 million in the reported quarter, of which $10 million was non-discretionary and $94.7 million represented discretionary.
Cash Flow & Liquidity
In the fourth quarter of 2020, SBA Communications generated $243.1 million of net cash from operations compared with the year-ago quarter’s $265.1 million. As of Dec 31, 2020, it had $340.9 million in cash and equivalents, with $11.2 billion of net debt.
During the fourth quarter, the company repurchased 1.7 million shares of its Class A common stock for $480.3 million at an average price per share of $290.89 under its $1-billion repurchase plan.
Further, it paid out a cash dividend of $51.5 million in fourth-quarter 2020.
Outlook
SBA Communications has provided initial guidance for 2021 and expects 2021 AFFO per share of $10-$10.41.
Site-leasing revenues are projected at $2,032-$2,052 million, and site development revenues are likely to be between $140 million and $160 million. Moreover, adjusted EBITDA is predicted between $1,562 million and $1,582 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, SBA Communications has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SBA Communications has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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SBA Communications (SBAC) Up 10.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for SBA Communications (SBAC - Free Report) . Shares have added about 10.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SBA Communications due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
SBA Communications Tops on Q4 AFFO & Revenues
SBA Communications delivered solid fourth-quarter 2020 results, wherein adjusted FFO (AFFO) and the top line increased year over year as well as surpassed the Zacks Consensus Estimate.
The AFFO per share of $2.49 for the fourth quarter surpassed the Zacks Consensus Estimate of $2.44. Further, the reported figure is 14.2% higher than the prior-year quarter’s $2.18.
Results reflected solid operating performance in both its site leasing and development business. The company continues to benefit from the addition of sites to its portfolio.
Quarterly total revenues increased 4.3% year over year to $535.9 million and outpaced the consensus estimate of $529.8 million.
The company also announced a new long-term master lease agreement with DISH Network Corporation, per which the latter will lease SBA Communications’ towers. Moreover, SBA Communications is expected to provide a wide array of pre-construction functions such as site acquisition as well as regulatory and compliance services.
Quarter in Detail
Site-leasing revenues were up 2.5% year over year to $493 million. This consisted of domestic site-leasing revenues of $393 million and international site-leasing revenues of $100 million. Domestic cash site-leasing revenues were $391.9 million, up 3.8% year over year. International cash site-leasing revenues were $100.9 million, up 0.5% year over year. Site-leasing operating profit summed $399.3 million, marking an increase of 3.4% year over year. Also, site development revenues jumped 31.9% to $43 million.
Overall operating income improved to $165.1 million from the year-ago quarter’s $153.9 million.
Adjusted EBITDA totaled $380.6 million, up 5% year over year, while adjusted EBITDA margin remained flat year over year at 71%.
During the December-end quarter, the company acquired 104 communication sites for a total cash consideration of $133.5 million. It also built 106 towers during this period. The company owned or operated 32,923 communication sites as of Dec 31, 2020. Of these, 16,546 sites are located in the United States and its territories, and 16,377 internationally.
SBA Communications also spent $16.4 million to purchase land and easements, and extend lease terms. Markedly, total cash capital expenditure was $104.7 million in the reported quarter, of which $10 million was non-discretionary and $94.7 million represented discretionary.
Cash Flow & Liquidity
In the fourth quarter of 2020, SBA Communications generated $243.1 million of net cash from operations compared with the year-ago quarter’s $265.1 million. As of Dec 31, 2020, it had $340.9 million in cash and equivalents, with $11.2 billion of net debt.
During the fourth quarter, the company repurchased 1.7 million shares of its Class A common stock for $480.3 million at an average price per share of $290.89 under its $1-billion repurchase plan.
Further, it paid out a cash dividend of $51.5 million in fourth-quarter 2020.
Outlook
SBA Communications has provided initial guidance for 2021 and expects 2021 AFFO per share of $10-$10.41.
Site-leasing revenues are projected at $2,032-$2,052 million, and site development revenues are likely to be between $140 million and $160 million. Moreover, adjusted EBITDA is predicted between $1,562 million and $1,582 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, SBA Communications has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SBA Communications has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.