It has been about a month since the last earnings report for SBA Communications (
SBAC Quick Quote SBAC - Free Report) . Shares have added about 3.7% 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 the most recent earnings report in order to get a better handle on the important drivers.
SBA Communications Beats on Q2 AFFO, Ups '21 Guidance
SBA Communications delivered solid second-quarter 2021 results, wherein adjusted FFO and the top line increased year over year and surpassed the Zacks Consensus Estimate as well.
The AFFO per share of $2.64 for the second quarter topped the Zacks Consensus Estimate of $2.59. Further, the reported figure is 15.3% higher than the prior-year quarter’s $2.29.
Results highlighted robust operating performance in both its site-leasing and development business. The company continues to benefit from the addition of sites to its portfolio. In addition to that, cost-control measures and interest-rate savings supported the company to raise the full-year outlook.
Quarterly total revenues increased 13.5% year over year to $575.5 million and outpaced the consensus estimate of $561.3 million.
In May, the company, through an existing trust, issued $1.165 billion of Tower Securities at an interest rate of 1.63%.
Quarter in Detail
Site-leasing revenues were up 8.6% year over year to $524.1 million. This consisted of domestic site-leasing revenues of $418.8 million and international site-leasing revenues of $105.3 million. Domestic cash site-leasing revenues came in at $408.3 million, while international cash site-leasing revenues were $106.3 million. Site-leasing operating profit summed $428.8 million, marking an increase of 9.7%, year over year.
Site-development revenues increased significantly to $51.4 million from the prior-year quarter’s $24.8 million.
Overall operating income declined to $199.8 million from the year-ago quarter’s $350.2 million.
Adjusted EBITDA totaled $400.2 million, up 8.5% year over year, while adjusted EBITDA margin declined to 70.7% from the year-ago figure of 72.8%.
During the June-end quarter, the company acquired 57 communication sites for cash consideration of $67 million. It also built 98 towers during this period. The company owned or operated 33,854 communication sites as of Jun 30, 2021. Of these, 17,306 sites are located in the United States and its territories, and 16,548 internationally.
SBA Communications also spent $11.8 million to purchase land and easements, and extend lease terms. Total cash capital expenditure was $108 million in the reported quarter, of which $10.2 million was non-discretionary and $97.8 million represented discretionary.
Cash Flow & Liquidity
In the second quarter, SBA Communications generated $352.8 million of net cash from operations compared with the year-ago quarter’s $314.7 million. As of Jun 30, 2021, the company had $273.8 million in cash and equivalents, with $11.7 billion of net debt.
Further, it paid out a cash dividend of $63.5 million in second-quarter 2021.
SBA Communications has hiked the guidance for 2021 and expects AFFO per share of $10.32-$10.72.
Site-leasing revenues are projected at $2,080-$2,100 million, and site-development revenues are expected to be between $180 million and $200 million. Moreover, adjusted EBITDA is predicted to lie between $1,586 million and $1,606 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
At this time, SBA Communications has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
SBA Communications has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.