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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 2023 results on May 1, after market close. The company’s quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
This Boca Raton, FL-based communications tower REIT delivered a negative surprise of 0.64% in terms of adjusted FFO (AFFO) per share in the last reported quarter. SBAC witnessed an improvement in site-leasing and site-development businesses, which aided the top line. It 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 three occasions and missed the same once, the average beat being 1.78%. The graph below depicts this surprise history:
SBA Communications Corporation Price and EPS Surprise
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.
SBA Communications’ first-quarter earnings are likely to have benefited from the rise in capital spending by wireless carriers on the incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions.
This phenomenon is expected to have driven tower leasing demand during the to-be-reported quarter, boosting SBAC’s top-line growth.
Moreover, SBAC has a resilient and stable site-leasing business model. It generates most of its revenues from long-term (typically 5-10 year) tower leases that have built-in rent escalators. This is likely to have supported stable site-leasing revenues for the company in the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter site-leasing revenues, which account for the lion’s share of total revenues, is pegged at $612.5 million, indicating an increase of 9.5% from the year-ago quarter’s $559.4 million. Our estimate for the same is pegged at $610.6 million, suggesting growth of 9.2%.
The Zacks Consensus Estimate for first-quarter site-development revenues stands at $62.4 million, suggesting growth of 3.5% from $60.3 million reported in the year-ago period.
The Zacks Consensus Estimate for quarterly total revenues is pegged at $676.2 million, implying year-over-year growth of 9.1%. We expect total revenues of $667.2 million for the quarter, indicating an increase of 7.6%.
We believe that to capitalize on the strong secular growth trends of the wireless industry, SBAC is likely to have continued with its asset base expansion through acquisitions and developments and the addition of sites to its portfolio during the quarter.
Also, its solid balance sheet strength is expected to have aided its investments in the existing 4G networks and its efforts for 5G deployment.
SBAC’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised 8.4% upward to $3.11 over the past week. Moreover, the figure implies year-over-year growth of 5.1%.
However, rising interest expenses and elevated churn in certain markets where the company operates might have cast a pall on SBAC’s quarterly performance. We estimate interest expenses to have risen 14.1% in first-quarter 2023.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for SBA Communications this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: SBAC has an Earnings ESP of -0.50 %. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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:
American Tower (AMT - Free Report) is slated to report quarterly numbers on Apr 26. AMT has an Earnings ESP of +0.63% and carries a Zacks Rank #3 presently.
Welltower (WELL - Free Report) is scheduled to report first-quarter earnings on May 2. WELL has an Earnings ESP of +0.35% and a Zacks Rank #3 currently.
Equinix (EQIX - Free Report) is scheduled to report first-quarter earnings on May 3. EQIX has an Earnings ESP of +0.44% and a Zacks Rank #2 (Buy) currently.
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What's in Store for SBA Communications (SBAC) in Q1 Earnings?
SBA Communications Corporation (SBAC - Free Report) is scheduled to report first-quarter 2023 results on May 1, after market close. The company’s quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.
This Boca Raton, FL-based communications tower REIT delivered a negative surprise of 0.64% in terms of adjusted FFO (AFFO) per share in the last reported quarter. SBAC witnessed an improvement in site-leasing and site-development businesses, which aided the top line. It 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 three occasions and missed the same once, the average beat being 1.78%. The graph below depicts this surprise history:
SBA Communications Corporation Price and EPS Surprise
SBA Communications Corporation price-eps-surprise | SBA Communications Corporation Quote
Factors at Play
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.
SBA Communications’ first-quarter earnings are likely to have benefited from the rise in capital spending by wireless carriers on the incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions.
This phenomenon is expected to have driven tower leasing demand during the to-be-reported quarter, boosting SBAC’s top-line growth.
Moreover, SBAC has a resilient and stable site-leasing business model. It generates most of its revenues from long-term (typically 5-10 year) tower leases that have built-in rent escalators. This is likely to have supported stable site-leasing revenues for the company in the to-be-reported quarter.
The Zacks Consensus Estimate for first-quarter site-leasing revenues, which account for the lion’s share of total revenues, is pegged at $612.5 million, indicating an increase of 9.5% from the year-ago quarter’s $559.4 million. Our estimate for the same is pegged at $610.6 million, suggesting growth of 9.2%.
The Zacks Consensus Estimate for first-quarter site-development revenues stands at $62.4 million, suggesting growth of 3.5% from $60.3 million reported in the year-ago period.
The Zacks Consensus Estimate for quarterly total revenues is pegged at $676.2 million, implying year-over-year growth of 9.1%. We expect total revenues of $667.2 million for the quarter, indicating an increase of 7.6%.
We believe that to capitalize on the strong secular growth trends of the wireless industry, SBAC is likely to have continued with its asset base expansion through acquisitions and developments and the addition of sites to its portfolio during the quarter.
Also, its solid balance sheet strength is expected to have aided its investments in the existing 4G networks and its efforts for 5G deployment.
SBAC’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised 8.4% upward to $3.11 over the past week. Moreover, the figure implies year-over-year growth of 5.1%.
However, rising interest expenses and elevated churn in certain markets where the company operates might have cast a pall on SBAC’s quarterly performance. We estimate interest expenses to have risen 14.1% in first-quarter 2023.
Earning Whispers
Our proven model does not conclusively predict a surprise in terms of FFO per share for SBA Communications this season. The combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — increases the odds of a beat. However, that’s not the case here.
Earnings ESP: SBAC has an Earnings ESP of -0.50 %. 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.
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:
American Tower (AMT - Free Report) is slated to report quarterly numbers on Apr 26. AMT has an Earnings ESP of +0.63% and carries a Zacks Rank #3 presently.
Welltower (WELL - Free Report) is scheduled to report first-quarter earnings on May 2. WELL has an Earnings ESP of +0.35% and a Zacks Rank #3 currently.
Equinix (EQIX - Free Report) is scheduled to report first-quarter earnings on May 3. EQIX has an Earnings ESP of +0.44% and a Zacks Rank #2 (Buy) currently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.