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What's in Store for SBA Communications (SBAC) in Q1 Earnings?

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SBA Communications Corporation (SBAC - Free Report) is scheduled to report first-quarter 2022 results on Apr 25 after market close. Results are expected to reflect year-over-year growth in quarterly revenues and funds from operations (FFO) per share.

This Boca Raton, FL-based communications tower REIT delivered a surprise of 0.72% in terms of adjusted FFO (AFFO) per share in the last reported quarter. Results reflected a robust operating performance in the site-leasing and development businesses. SBA Communications continued to benefit from the addition of sites to its portfolio.

Over the preceding four quarters, SBAC’s AFFO per share surpassed the Zacks Consensus Estimate on each occasion, the average beat being 2.56%. The graph below depicts this surprise history:

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

Factors at Play

In the first quarter, SBA Communications is likely to have benefited from secular growth trends in the wireless industry. As the data volume for the wireless and wired networks has been growing rapidly amid the widespread adoption of smartphones and applications, network carriers continue to spend on network deployments to harness spectrum abilities and improve and densify their cell sites and coverage.

The long-term tower lease agreements that have built-in rent escalators are anticipated to have contributed to the recurring site rentals during the March-end quarter.

The consensus estimate for first-quarter site-leasing revenues, which account for the lion’s share of total revenues, is pegged at $552 million, suggesting growth from $539 million in the prior quarter and a substantial increase from the year-ago quarter’s tally of $505 million.

Moreover, acquisitions and developments are likely to have expanded the asset base and aided revenues during the quarter in discussion. Subsequent to the fourth quarter of 2021, SBA Communications purchased or was under contract to purchase 371 communication sites for a total of $137.1 million in cash.

The Zacks Consensus Estimate for first-quarter site-development revenues is pegged at $51 million. This calls for growth from $43.64 million in the year-ago period, though down from $56 million in the prior quarter.

The Zacks Consensus Estimate for first-quarter total revenues is pegged at $603.9 million, calling for year-over-year growth of 10.05%.

SBA Communications’ activities during the quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised 2 cents upward to $2.88 over the past month. Also, it suggests year-over-year growth of 11.63%.

Here Is What Our Quantitative Model Predicts:

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

Earnings ESP: SBAC has an Earnings ESP of +2.14 %. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Other Stocks That Warrant a Look

Here are some other stocks like Public Storage (PSA - Free Report) , Host Hotels & Resorts, Inc. (HST - Free Report) and Cousins Properties Incorporated (CUZ - Free Report) that are worth considering from the REIT sector as our model shows that these have the right combination of elements to deliver a surprise this reporting cycle:

Public Storage, slated to release first-quarter earnings on May 3, has an Earnings ESP of +0.17% and a Zacks Rank of 2 (Buy) at present.

Host Hotels & Resorts, scheduled to report quarterly figures on May 4, has an Earnings ESP of +2.00% and a Zacks Rank of 1 currently.

Cousins Properties Incorporated, slated to report quarterly numbers on Apr 28, has an Earnings ESP of +0.50% and carries a Zacks Rank of 3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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.