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Should You Retain SBA Communications (SBAC) Stock Presently?
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SBA Communications Corporation (SBAC - Free Report) is seeing high demand for its tower assets, as wireless service providers continue to advance their wireless networks. However, a highly leveraged balance sheet limits its ability to withstand any unexpected negative externalities in the future.
High mobile data usage, increased innovation, and adoption of data-driven mobile devices and applications such as machine-to-machine connections, social networking and streaming of video, and deployments of 5G networks have compelled carriers to advance their wireless networks.
Notably, a ramp in 5G-related investments, the timing of C-Band spectrum activity from some large customers, and initial leasing contributions from the Dish agreement are projected to increase SBA Communications’ leasing revenues in the ongoing year.
Amid the tailwinds, the company is also expanding its portfolio on the back of acquisitions. Subsequent to the first-quarter 2021 end, it purchased or agreed to purchase 413 communication sites for $110.2 million. The majority of the transactions is expected to close by the end of third-quarter 2021 and will aid the company to capitalize on the wireless use potential of the assets.
Moreover, a robust balance sheet and operational strength provide flexibility to the company to be opportunistic regarding investment choices, share repurchases and dividend growth.
In fact, the site-leasing business model offers operational resilience with stable revenues. Markedly, the company generates the majority of its revenues from long-term tower leases that have built-in rent escalators. Hence, with high operating margins, its tower-leasing business remains attractive.
However, the company has high customer concentration, with Verizon (VZ - Free Report) , AT&T (T - Free Report) and T-Mobile (TMUS - Free Report) accounting for the majority of its domestic site-leasing revenues. Loss of any of the customers or consolidation among them or a reduction in network spending will lead to a significant material impact on the company’s top line.
SBA Communications had $12.1 billion of total debt and leverage of 7.6X as of the first-quarter end. First-quarter leverage ratio surpassed the company’s target of 7X-7.5X due to the PG&E acquisition deal. Moreover, its debt-to-capital ratio is higher than the industry average.
Also, the company’s international footprint and geographic diversification expose it to adverse foreign currency translation impact. In fact, foreign exchange headwind negatively impacted first-quarter revenues by $12.6 million on a year-over-year basis.
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Should You Retain SBA Communications (SBAC) Stock Presently?
SBA Communications Corporation (SBAC - Free Report) is seeing high demand for its tower assets, as wireless service providers continue to advance their wireless networks. However, a highly leveraged balance sheet limits its ability to withstand any unexpected negative externalities in the future.
High mobile data usage, increased innovation, and adoption of data-driven mobile devices and applications such as machine-to-machine connections, social networking and streaming of video, and deployments of 5G networks have compelled carriers to advance their wireless networks.
Notably, a ramp in 5G-related investments, the timing of C-Band spectrum activity from some large customers, and initial leasing contributions from the Dish agreement are projected to increase SBA Communications’ leasing revenues in the ongoing year.
Amid the tailwinds, the company is also expanding its portfolio on the back of acquisitions. Subsequent to the first-quarter 2021 end, it purchased or agreed to purchase 413 communication sites for $110.2 million. The majority of the transactions is expected to close by the end of third-quarter 2021 and will aid the company to capitalize on the wireless use potential of the assets.
Moreover, a robust balance sheet and operational strength provide flexibility to the company to be opportunistic regarding investment choices, share repurchases and dividend growth.
In fact, the site-leasing business model offers operational resilience with stable revenues. Markedly, the company generates the majority of its revenues from long-term tower leases that have built-in rent escalators. Hence, with high operating margins, its tower-leasing business remains attractive.
Shares of this Zacks Rank #3 (Hold) company have gained 20.4% over the past three months compared with the industry's growth of 12.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, the company has high customer concentration, with Verizon (VZ - Free Report) , AT&T (T - Free Report) and T-Mobile (TMUS - Free Report) accounting for the majority of its domestic site-leasing revenues. Loss of any of the customers or consolidation among them or a reduction in network spending will lead to a significant material impact on the company’s top line.
SBA Communications had $12.1 billion of total debt and leverage of 7.6X as of the first-quarter end. First-quarter leverage ratio surpassed the company’s target of 7X-7.5X due to the PG&E acquisition deal. Moreover, its debt-to-capital ratio is higher than the industry average.
Also, the company’s international footprint and geographic diversification expose it to adverse foreign currency translation impact. In fact, foreign exchange headwind negatively impacted first-quarter revenues by $12.6 million on a year-over-year basis.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency have sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>