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What's in Store for Crown Castle (CCI) This Earnings Season?
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Crown Castle Inc. (CCI - Free Report) is scheduled to release second-quarter 2023 results on Jul 19 after the closing bell. Its quarterly results are likely to exhibit 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 lagged the Zacks Consensus Estimate by 1.55%. Higher operating expenses in the quarter were a deterrent. Nonetheless, the rise in site-rental revenues amid elevated tower space demand supported CCI’s year-over-year top-line growth.
Over the preceding four quarters, CCI’s FFO per share surpassed estimates on three occasions and missed the same once, the average being 0.30%. This is depicted in the graph below:
The advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications have steered 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. This upbeat trend is likely to have driven healthy tower leasing activity during the quarter, boosting Crown Castle’s quarterly earnings.
Amid this soaring demand, the company’s long-term lease agreements (typically five to 15 years) with the top U.S. carriers, having a strong credit profile, are anticipated to have aided its site rental revenues in the to-be-reported quarter.
The consensus estimate for net revenues from site rentals is pegged at $1.68 billion for the quarter, indicating 7.5% growth from the year-ago quarter’s reported figure. Our estimate for quarterly site rentals revenues stands at $1.68 billion, implying an increase of 7.3% year over year.
The consensus estimate for net revenues from the network services and other segment stands at $180.17 million for the second quarter, suggesting a 7.9% increase year over year. We estimate net revenues from the network services and other segment to grow 8.1% year over year during the quarter.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.86 billion, indicating an increase of 7.5% from the year-ago reported number.
Further, CCI’s solid balance-sheet position is likely to have supported its small cell deployment efforts required to increase the capacity and density of the wireless network for 5G deployment.
However, the rationalization of a portion of Sprint's legacy network by T-Mobile, one of Crown Caste’s key customers, is expected to have adversely impacted its quarterly performance. Management expects the majority of the remaining $110-$120 million in accelerated payments to take place in the second quarter.
Also, high interest expenses are likely to have been a spoilsport for CCI during the to-be-reported quarter. We expect second-quarter 2023 interest expense and amortization of deferred financing costs to rise 33% year over year.
Crown Castle’s activities in the quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1% downward over the past month to $1.98. Nonetheless, the figure suggests a 10% increase from the prior-year quarter’s reported figure.
What Our Quantitative Model Predicts
Our proven model predicts 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. That is just the case here.
Earnings ESP: Crown Castle has an Earnings ESP of +1.07%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other 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:
Prologis (PLD - Free Report) is scheduled to report quarterly figures on Jul 18. PLD has an Earnings ESP of +0.10% and a Zacks Rank #3 currently.
SL Green (SLG - Free Report) is slated to release second-quarter earnings on Jul 19. SLG has an Earnings ESP of +1.41% and a Zacks Rank #3 at present.
W.P. Carey (WPC - Free Report) is slated to report quarterly numbers on Jul 28. WPC has an Earnings ESP of +1.13% and carries a Zacks Rank #2 presently.
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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What's in Store for Crown Castle (CCI) This Earnings Season?
Crown Castle Inc. (CCI - Free Report) is scheduled to release second-quarter 2023 results on Jul 19 after the closing bell. Its quarterly results are likely to exhibit 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 lagged the Zacks Consensus Estimate by 1.55%. Higher operating expenses in the quarter were a deterrent. Nonetheless, the rise in site-rental revenues amid elevated tower space demand supported CCI’s year-over-year top-line growth.
Over the preceding four quarters, CCI’s FFO per share surpassed estimates on three occasions and missed the same once, the average being 0.30%. This is depicted in the graph below:
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 steered 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. This upbeat trend is likely to have driven healthy tower leasing activity during the quarter, boosting Crown Castle’s quarterly earnings.
Amid this soaring demand, the company’s long-term lease agreements (typically five to 15 years) with the top U.S. carriers, having a strong credit profile, are anticipated to have aided its site rental revenues in the to-be-reported quarter.
The consensus estimate for net revenues from site rentals is pegged at $1.68 billion for the quarter, indicating 7.5% growth from the year-ago quarter’s reported figure. Our estimate for quarterly site rentals revenues stands at $1.68 billion, implying an increase of 7.3% year over year.
The consensus estimate for net revenues from the network services and other segment stands at $180.17 million for the second quarter, suggesting a 7.9% increase year over year. We estimate net revenues from the network services and other segment to grow 8.1% year over year during the quarter.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.86 billion, indicating an increase of 7.5% from the year-ago reported number.
Further, CCI’s solid balance-sheet position is likely to have supported its small cell deployment efforts required to increase the capacity and density of the wireless network for 5G deployment.
However, the rationalization of a portion of Sprint's legacy network by T-Mobile, one of Crown Caste’s key customers, is expected to have adversely impacted its quarterly performance. Management expects the majority of the remaining $110-$120 million in accelerated payments to take place in the second quarter.
Also, high interest expenses are likely to have been a spoilsport for CCI during the to-be-reported quarter. We expect second-quarter 2023 interest expense and amortization of deferred financing costs to rise 33% year over year.
Crown Castle’s activities in the quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised 1% downward over the past month to $1.98. Nonetheless, the figure suggests a 10% increase from the prior-year quarter’s reported figure.
What Our Quantitative Model Predicts
Our proven model predicts 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. That is just the case here.
Earnings ESP: Crown Castle has an Earnings ESP of +1.07%. 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 #2 (Buy). 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 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:
Prologis (PLD - Free Report) is scheduled to report quarterly figures on Jul 18. PLD has an Earnings ESP of +0.10% and a Zacks Rank #3 currently.
SL Green (SLG - Free Report) is slated to release second-quarter earnings on Jul 19. SLG has an Earnings ESP of +1.41% and a Zacks Rank #3 at present.
W.P. Carey (WPC - Free Report) is slated to report quarterly numbers on Jul 28. WPC has an Earnings ESP of +1.13% and carries a Zacks Rank #2 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.