Back to top

Image: Bigstock

What's in Store for Crown Castle (CCI) This Earnings Season?

Read MoreHide Full Article

Crown Castle Inc. (CCI - Free Report) is scheduled to release fourth-quarter 2022 and full-year results on Jan 25 after the closing bell. Its quarterly results are likely to reflect year-over-year growth in revenues and funds from operations (FFO) per share.

In the last reported quarter, this Houston, TX-based real estate investment trust’s (REIT) adjusted FFO per share surpassed the Zacks Consensus Estimate by 1.09%. The growth in site-rental revenues due to elevated tower space demand aided the top line.

Over the preceding four quarters, CCI’s FFO per share surpassed estimates on each occasion, the average being 2.26%. This is depicted in the graph below:

Crown Castle Inc. Price and EPS Surprise Crown Castle Inc. Price and EPS Surprise

Crown Castle Inc. price-eps-surprise | Crown Castle Inc. Quote

Factors to Note

The advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications have driven the growth in mobile data usage globally. Also, rampant usage of network-intensive applications for video conferencing and cloud services, and remote-working scenarios have fueled the rise.

As a result, during the fourth quarter, tower REITs such as Crown Castle are likely to have capitalized on the growing demand for tower leasing as wireless service providers and carriers continue to expand their networks and deploy additional equipment for existing networks to boost their network coverage and capacity.

Amid this soaring demand, Crown Castle’s long-term lease agreements (typically five to 15 years) with the top United States carriers, having a strong credit profile, are anticipated to have aided its site rental revenues in the quarter.

The consensus estimate for net revenues from site rentals is pegged at $1.57 billion for the quarter, indicating 6.8% growth from the year-ago quarter’s reported figure. Our estimate for the same is $1.57 billion.

The consensus estimate for net revenues from the network services and other segment stands at $175 million for the fourth quarter, implying a fall of 2.8% from the year-ago reported figure. Our estimate stands at $185.5 million.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.75 billion, indicating an increase of 5.7% year over year. Our estimate for the same stands at $1.75 billion.

Moreover, to boost its small cells offerings required to increase the capacity and density of the wireless network for 5G deployment, CCI is likely to have deployed 5,000 nodes by the end of 2022.

In October 2022, Crown Castle increased its dividend payment to $1.565 per share from $1.47, denoting a hike of 6.5%.

Nonetheless, the rationalization of a portion of Sprint's legacy network by T-Mobile, one of Crown Caste’s key customers, and higher interest expenses are likely to have been headwinds for the company during the fourth quarter.

The Zacks Consensus Estimate for the quarterly FFO per share has been unchanged at $1.83 over the past month. However, it suggests a 3.4% increase from the prior-year quarter’s reported figure.

For the full year, the Zacks Consensus Estimate for FFO per share has been unrevised at $7.36 over the past month. Nonetheless, the figure indicates a 5.9% increase from the year-ago reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an FFO beat for Crown Castle this time. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that is not the case here.

Earnings ESP: Crown Castle has an Earnings ESP of -1.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Stocks That Warrant a Look

Here are some stocks 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:

Highwoods Properties (HIW - Free Report) is slated to release fourth-quarter earnings on Feb 7. HIW has an Earnings ESP of +0.41% and a Zacks Rank #3 at present.

Equinix (EQIX - Free Report) is scheduled to report quarterly figures on Feb 15. EQIX has an Earnings ESP of +0.54% and a Zacks Rank #3 currently.

Stag Industrial (STAG - Free Report) is slated to report quarterly numbers on Feb 15. STAG has an Earnings ESP of +2.89% and carries a Zacks Rank #2 (Buy) presently.

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.

Published in