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Key Reasons to Add Crown Castle (CCI) to Your Portfolio Now
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Crown Castle Inc. (CCI - Free Report) owns an unmatched portfolio of towers in the United States and has a significant presence in the top 100 basic trading areas of the country.
The increase in mobile data usage, spectrum availability and high network investments by wireless carriers to deploy 5G networks have led to a rise in demand for the company’s wireless communication assets, positioning this Houston, TX-based real estate investment trust (REIT) well for growth.
Shares of this Zacks Rank #2 (Buy) company have gained 1.8% in the past month compared with the industry’s growth of 3.3%. However, given the rise in wireless connectivity usage and the secular trends of the industry, there is immense scope for growth, and the company is expected to perform well in the quarters ahead. Hence, this marks a good entry point in the stock now.
Image Source: Zacks Investment Research
Factors That Make Crown Castle a Solid Pick
Healthy Industry Fundamentals: 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.
This has led to greater capital spending by wireless carriers on the back of incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions, aiding demand for CCI’s wireless communication infrastructure. We expect the company’s net revenues to improve 2.8% year over year for 2023.
Solid Tenant Base: The company enjoys a strong creditworthy tenant base which includes names like T-Mobile, AT&T and Verizon. This adds resiliency to its business. Moreover, its long-term lease agreements (typically five to 15 years) with the top U.S. carriers assure steady site rental cash flows. We project CCI’s total site rental revenues to increase 3.5% year over year.
Strategic Investments: With increased innovation and adoption of data-driven mobile devices and applications, such as machine-to-machine connections, social networking and streaming of video, wireless data consumption is expected to escalate considerably in the future.
To capitalize on this upbeat trend, Crown Castle has been increasingly investing in new small cell and fiber assets to enhance the capacity and network density required for wireless networks. It expects to double the rate of small cell deployments this year compared with the 5,000 nodes it put on air in 2022, which is encouraging.
Balance Sheet & Cash Flow Strength: Crown Castle is focused on maintaining a healthy balance sheet position with ample liquidity. As of the end of the first quarter of 2023, its cash and cash equivalents totaled $187 million while liquidity under its revolving credit facility amounted to more than $5.5 billion. With investment-grade credit ratings of BBB, BBB+ and Baa3 from Standard & Poor’s, Fitch, and Moody’s, respectively, and limited near-term maturities, CCI is well-poised to capitalize on long-term growth opportunities.
The company’s current cash flow growth is projected at 20.75% compared with the industry’s 10.63%. In addition, its trailing 12-month return on equity (ROE) is 22.12% compared with the industry’s average of 3.64%, highlighting the efficient utilization of its shareholders’ funds than its peers.
Dividend: Solid dividend payouts are arguably the biggest enticement for REIT shareholders, and Crown Castle is committed to that. It has increased its dividend five times in the last five years. Its five-year annualized dividend growth rate is 8.99%. Such efforts boost investors’ confidence in the stock. Check Crown Castle’s dividend history here.
Scheduled to release second-quarter 2023 results on Jul 19 after the closing bell, Crown Castle is expected to have witnessed year-over-year growth in revenues and funds from operations (FFO) per share. The Zacks Consensus Estimate for its quarterly FFO per share is currently pegged at $1.98, suggesting year-over-year growth of 10%.
The Zacks Consensus Estimate for Welltower’s current-year FFO per share has moved marginally northward over the past month to $3.48.
The consensus mark for Ventas’ 2023 FFO per share has moved slightly upward in the past two months to $2.98.
The consensus estimate for EastGroup Properties’ ongoing year’s FFO per share has been raised marginally upward over the past two months to $7.56.
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.
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Key Reasons to Add Crown Castle (CCI) to Your Portfolio Now
Crown Castle Inc. (CCI - Free Report) owns an unmatched portfolio of towers in the United States and has a significant presence in the top 100 basic trading areas of the country.
The increase in mobile data usage, spectrum availability and high network investments by wireless carriers to deploy 5G networks have led to a rise in demand for the company’s wireless communication assets, positioning this Houston, TX-based real estate investment trust (REIT) well for growth.
Shares of this Zacks Rank #2 (Buy) company have gained 1.8% in the past month compared with the industry’s growth of 3.3%. However, given the rise in wireless connectivity usage and the secular trends of the industry, there is immense scope for growth, and the company is expected to perform well in the quarters ahead. Hence, this marks a good entry point in the stock now.
Image Source: Zacks Investment Research
Factors That Make Crown Castle a Solid Pick
Healthy Industry Fundamentals: 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.
This has led to greater capital spending by wireless carriers on the back of incremental demand from global 4G and 5G deployment efforts, growing wireless penetration and spectrum auctions, aiding demand for CCI’s wireless communication infrastructure. We expect the company’s net revenues to improve 2.8% year over year for 2023.
Solid Tenant Base: The company enjoys a strong creditworthy tenant base which includes names like T-Mobile, AT&T and Verizon. This adds resiliency to its business. Moreover, its long-term lease agreements (typically five to 15 years) with the top U.S. carriers assure steady site rental cash flows. We project CCI’s total site rental revenues to increase 3.5% year over year.
Strategic Investments: With increased innovation and adoption of data-driven mobile devices and applications, such as machine-to-machine connections, social networking and streaming of video, wireless data consumption is expected to escalate considerably in the future.
To capitalize on this upbeat trend, Crown Castle has been increasingly investing in new small cell and fiber assets to enhance the capacity and network density required for wireless networks. It expects to double the rate of small cell deployments this year compared with the 5,000 nodes it put on air in 2022, which is encouraging.
Balance Sheet & Cash Flow Strength: Crown Castle is focused on maintaining a healthy balance sheet position with ample liquidity. As of the end of the first quarter of 2023, its cash and cash equivalents totaled $187 million while liquidity under its revolving credit facility amounted to more than $5.5 billion. With investment-grade credit ratings of BBB, BBB+ and Baa3 from Standard & Poor’s, Fitch, and Moody’s, respectively, and limited near-term maturities, CCI is well-poised to capitalize on long-term growth opportunities.
The company’s current cash flow growth is projected at 20.75% compared with the industry’s 10.63%. In addition, its trailing 12-month return on equity (ROE) is 22.12% compared with the industry’s average of 3.64%, highlighting the efficient utilization of its shareholders’ funds than its peers.
Dividend: Solid dividend payouts are arguably the biggest enticement for REIT shareholders, and Crown Castle is committed to that. It has increased its dividend five times in the last five years. Its five-year annualized dividend growth rate is 8.99%. Such efforts boost investors’ confidence in the stock. Check Crown Castle’s dividend history here.
Scheduled to release second-quarter 2023 results on Jul 19 after the closing bell, Crown Castle is expected to have witnessed year-over-year growth in revenues and funds from operations (FFO) per share. The Zacks Consensus Estimate for its quarterly FFO per share is currently pegged at $1.98, suggesting year-over-year growth of 10%.
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Welltower (WELL - Free Report) , Ventas (VTR - Free Report) and EastGroup Properties (EGP - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Welltower’s current-year FFO per share has moved marginally northward over the past month to $3.48.
The consensus mark for Ventas’ 2023 FFO per share has moved slightly upward in the past two months to $2.98.
The consensus estimate for EastGroup Properties’ ongoing year’s FFO per share has been raised marginally upward over the past two months to $7.56.
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.