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American Tower (AMT) to Post Q3 Earnings: Is a Beat in Store?
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American Tower Corporation (AMT - Free Report) is scheduled to release third-quarter 2023 results on Oct 26 before the opening bell. 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 reported adjusted FFO per share of $2.46, beating the consensus mark by 4.24%. The quarterly results reflected better-than-anticipated revenues, aided by improving revenues across its Property segment. AMT also recorded healthy year-over-year organic tenant billings growth of 6.2% and total tenant billings growth of 7.2%.
Over the preceding four quarters, the company topped adjusted FFO per share estimates on three occasions and missed once, the average beat being 3.35%. The graph below depicts this surprise history:
The advancement in mobile technology, such as the 4G and 5G networks, and the proliferation of bandwidth-intensive applications have led to incremental mobile data usage globally. Also, rampant usage of network-intensive applications for video conferencing and cloud services, and hybrid-working scenarios have accelerated the rise.
As a result, wireless service providers and carriers are expanding their networks and deploying additional equipment for existing networks to boost their network coverage and capacity to meet the rising consumer demand. This positive trend is likely to have spurred the demand for AMT’s extensive and geographically diversified communication real estate portfolio, benefiting its quarterly performance.
The company’s long-term (typically 5-10 year) tower leases with major wireless carriers with multiple renewal period options are expected to have aided stable revenue generation, boosting the top line.
Also, with hybrid IT and multi-cloud access becoming more relevant for continued digital transformation across all workloads, customers are outsourcing to CoreSite’s (an American Tower subsidiary) diverse ecosystem of highly interconnected data center facilities and critical cloud on-ramps.
American Tower is anticipated to have carried on with its macro-tower investments during the quarter, backed by a robust balance sheet position.
Nonetheless, higher interest expenses and volatility in foreign currency exchange rates are likely to have impaired AMT’s performance to some extent during the quarter. We expect interest expenses to flare up 22.3% year over year in the third quarter. Also, elevated churn in emerging markets where the company operates may have been a spoilsport.
Q3 Projections
The Zacks Consensus Estimate for quarterly revenues is pegged at $2.76 billion, indicating a rise of 3.3% from the year-ago period’s reported figure.
The consensus estimate for operating revenues from the Property segment is pegged at $2.71 billion, indicating 3.8% growth from $2.61 billion reported in the year-ago period. Our estimate stands at $2.69 billion, implying an increase of 3.1%.
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 stands at $43.2 million, suggesting a fall of 29.9% from $61.6 million reported in the prior-year quarter. We expect Service segment operating revenues to be $54.9 million, down 11% year over year.
The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward to $2.35 over the past month. The figure, however, suggests a marginal decline from the year-ago quarter’s reported figure.
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. That is just the case here.
Earnings ESP: American Tower has an Earnings ESP of +0.59%. 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, too, have the right combination of elements to deliver a surprise this reporting cycle:
VICI Properties (VICI - Free Report) is slated to report quarterly numbers on Oct 25. VICI has an Earnings ESP of +1.50% and carries a Zacks Rank #2 (Buy) presently.
Digital Realty Trust (DLR - Free Report) is slated to report quarterly numbers on Oct 26. DLR has an Earnings ESP of +2.09% and carries a Zacks Rank #3 presently.
SBA Communications (SBAC - Free Report) is slated to report quarterly numbers on Nov 2. SBAC has an Earnings ESP of +0.27% and carries a Zacks Rank #3 presently.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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American Tower (AMT) to Post Q3 Earnings: Is a Beat in Store?
American Tower Corporation (AMT - Free Report) is scheduled to release third-quarter 2023 results on Oct 26 before the opening bell. 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 reported adjusted FFO per share of $2.46, beating the consensus mark by 4.24%. The quarterly results reflected better-than-anticipated revenues, aided by improving revenues across its Property segment. AMT also recorded healthy year-over-year organic tenant billings growth of 6.2% and total tenant billings growth of 7.2%.
Over the preceding four quarters, the company topped adjusted FFO per share estimates on three occasions and missed once, the average beat being 3.35%. 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
The advancement in mobile technology, such as the 4G and 5G networks, and the proliferation of bandwidth-intensive applications have led to incremental mobile data usage globally. Also, rampant usage of network-intensive applications for video conferencing and cloud services, and hybrid-working scenarios have accelerated the rise.
As a result, wireless service providers and carriers are expanding their networks and deploying additional equipment for existing networks to boost their network coverage and capacity to meet the rising consumer demand. This positive trend is likely to have spurred the demand for AMT’s extensive and geographically diversified communication real estate portfolio, benefiting its quarterly performance.
The company’s long-term (typically 5-10 year) tower leases with major wireless carriers with multiple renewal period options are expected to have aided stable revenue generation, boosting the top line.
Also, with hybrid IT and multi-cloud access becoming more relevant for continued digital transformation across all workloads, customers are outsourcing to CoreSite’s (an American Tower subsidiary) diverse ecosystem of highly interconnected data center facilities and critical cloud on-ramps.
American Tower is anticipated to have carried on with its macro-tower investments during the quarter, backed by a robust balance sheet position.
Nonetheless, higher interest expenses and volatility in foreign currency exchange rates are likely to have impaired AMT’s performance to some extent during the quarter. We expect interest expenses to flare up 22.3% year over year in the third quarter. Also, elevated churn in emerging markets where the company operates may have been a spoilsport.
Q3 Projections
The Zacks Consensus Estimate for quarterly revenues is pegged at $2.76 billion, indicating a rise of 3.3% from the year-ago period’s reported figure.
The consensus estimate for operating revenues from the Property segment is pegged at $2.71 billion, indicating 3.8% growth from $2.61 billion reported in the year-ago period. Our estimate stands at $2.69 billion, implying an increase of 3.1%.
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 stands at $43.2 million, suggesting a fall of 29.9% from $61.6 million reported in the prior-year quarter. We expect Service segment operating revenues to be $54.9 million, down 11% year over year.
The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward to $2.35 over the past month. The figure, however, suggests a marginal decline from the year-ago quarter’s reported figure.
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. That is just the case here.
Earnings ESP: American Tower has an Earnings ESP of +0.59%. 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 stocks that are worth considering from the REIT sector, as our model shows that these, too, have the right combination of elements to deliver a surprise this reporting cycle:
VICI Properties (VICI - Free Report) is slated to report quarterly numbers on Oct 25. VICI has an Earnings ESP of +1.50% and carries a Zacks Rank #2 (Buy) presently.
Digital Realty Trust (DLR - Free Report) is slated to report quarterly numbers on Oct 26. DLR has an Earnings ESP of +2.09% and carries a Zacks Rank #3 presently.
SBA Communications (SBAC - Free Report) is slated to report quarterly numbers on Nov 2. SBAC has an Earnings ESP of +0.27% and carries a Zacks Rank #3 presently.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.