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Is a Beat in Store for American Tower (AMT) in Q2 Earnings?
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American Tower Corporation (AMT - Free Report) is scheduled to release second-quarter 2023 results before the opening bell on Jul 27. While the quarterly results are expected to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a decline.
In the last quarter, American Tower surpassed adjusted FFO per share estimates by 6.72%. The quarterly results reflected an improvement in revenues across its Property segment. AMT also recorded healthy year-over-year organic tenant billings growth of 6.4% and total tenant billings growth of 7.3%.
Over the preceding four quarters, the company topped FFO per share estimates on three occasions and missed once, the average beat being 3.83%. The graph below depicts this surprise history:
During the second quarter, American Tower is likely to have benefited from secular growth trends in the wireless industry. With the advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications, mobile data usage has increased significantly globally. Also, the rampant usage of network-intensive applications for video conferencing and cloud services, and hybrid-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 AMT’s wireless communication infrastructure. This upbeat trend is likely to have driven healthy tower leasing activity during the quarter, boosting the company’s quarterly earnings.
AMT is known to have a resilient and stable business model and generates most of its revenues from non-cancellable, long-term (typically 5-10 year) tower leases with major wireless carriers with multiple renewal period options. This is expected to have aided stable revenue generation during the second quarter.
Also, with customers leveraging on CoreSite’s (an American Tower subsidiary) diverse ecosystem, the demand for highly interconnected data center facilities and critical cloud on-ramps is anticipated to have remained robust during the quarter.
The Zacks Consensus Estimate for second-quarter 2023 revenues is pegged at $2.73 billion, indicating a rise of 2.2% from the year-earlier period.
The Zacks Consensus Estimate for operating revenues from the Property segment is pegged at $2.67 billion, indicating almost 2% growth from $2.61 billion reported in the year-ago period. Our estimate for the same stands at $2.66 billion, implying an increase of 1.6%.
However, operating revenues from the Service segment are expected to be on the lower side in the to-be-reported quarter. The Zacks Consensus Estimate for the same stands at $57.3 million, suggesting a fall of 4.2% from $59.8 million reported in the prior-year quarter. We expect Service segment operating revenues to be $56.1 million, down 6.2% year over year.
Further, backed by a robust balance sheet, we expect the company to have continued with its investments in existing 4G networks and its efforts for 5G deployment during the quarter.
American Tower’s activities during the to-be-reported quarter were adequate to secure analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward to $2.36 over the past month. The figure, however, suggests a year-over-year decline of 8.9%.
Higher interest expenses and elevated churn in emerging markets where the company operates might have cast a pall on AMT’s performance to some extent during the quarter. We expect the quarter’s interest expenses to flare up 21.3% year over year.
What Our Quantitative Model Predicts
Our proven model predicts a surprise in terms of FFO per share for American Tower this season. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. This is the case here.
Earnings ESP: American Tower has an Earnings ESP of +2.82%. 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:
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 (Buy) presently.
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 currently.
Ryman Hospitality Properties (RHP - Free Report) is scheduled to report quarterly numbers on Aug 3. RHP has an Earnings ESP of +3.87% and a Zacks Rank #1 currently.
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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Is a Beat in Store for American Tower (AMT) in Q2 Earnings?
American Tower Corporation (AMT - Free Report) is scheduled to release second-quarter 2023 results before the opening bell on Jul 27. While the quarterly results are expected to reflect year-over-year growth in revenues, funds from operations (FFO) per share might exhibit a decline.
In the last quarter, American Tower surpassed adjusted FFO per share estimates by 6.72%. The quarterly results reflected an improvement in revenues across its Property segment. AMT also recorded healthy year-over-year organic tenant billings growth of 6.4% and total tenant billings growth of 7.3%.
Over the preceding four quarters, the company topped FFO per share estimates on three occasions and missed once, the average beat being 3.83%. The graph below depicts this surprise history:
American Tower Corporation Price and EPS Surprise
American Tower Corporation price-eps-surprise | American Tower Corporation Quote
Factors to Note
During the second quarter, American Tower is likely to have benefited from secular growth trends in the wireless industry. With the advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications, mobile data usage has increased significantly globally. Also, the rampant usage of network-intensive applications for video conferencing and cloud services, and hybrid-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 AMT’s wireless communication infrastructure. This upbeat trend is likely to have driven healthy tower leasing activity during the quarter, boosting the company’s quarterly earnings.
AMT is known to have a resilient and stable business model and generates most of its revenues from non-cancellable, long-term (typically 5-10 year) tower leases with major wireless carriers with multiple renewal period options. This is expected to have aided stable revenue generation during the second quarter.
Also, with customers leveraging on CoreSite’s (an American Tower subsidiary) diverse ecosystem, the demand for highly interconnected data center facilities and critical cloud on-ramps is anticipated to have remained robust during the quarter.
The Zacks Consensus Estimate for second-quarter 2023 revenues is pegged at $2.73 billion, indicating a rise of 2.2% from the year-earlier period.
The Zacks Consensus Estimate for operating revenues from the Property segment is pegged at $2.67 billion, indicating almost 2% growth from $2.61 billion reported in the year-ago period. Our estimate for the same stands at $2.66 billion, implying an increase of 1.6%.
However, operating revenues from the Service segment are expected to be on the lower side in the to-be-reported quarter. The Zacks Consensus Estimate for the same stands at $57.3 million, suggesting a fall of 4.2% from $59.8 million reported in the prior-year quarter. We expect Service segment operating revenues to be $56.1 million, down 6.2% year over year.
Further, backed by a robust balance sheet, we expect the company to have continued with its investments in existing 4G networks and its efforts for 5G deployment during the quarter.
American Tower’s activities during the to-be-reported quarter were adequate to secure analysts’ confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward to $2.36 over the past month. The figure, however, suggests a year-over-year decline of 8.9%.
Higher interest expenses and elevated churn in emerging markets where the company operates might have cast a pall on AMT’s performance to some extent during the quarter. We expect the quarter’s interest expenses to flare up 21.3% year over year.
What Our Quantitative Model Predicts
Our proven model predicts a surprise in terms of FFO per share for American Tower this season. The right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — increases the odds of a beat. This is the case here.
Earnings ESP: American Tower has an Earnings ESP of +2.82%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: American Tower 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 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:
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 (Buy) presently.
Ventas (VTR - Free Report) is scheduled to report quarterly numbers on Aug 3. VTR has an Earnings ESP of +1.75% and a Zacks Rank #2 currently.
Ryman Hospitality Properties (RHP - Free Report) is scheduled to report quarterly numbers on Aug 3. RHP has an Earnings ESP of +3.87% and a Zacks Rank #1 currently.
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.