We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain Crown Castle (CCI) Stock Now
Read MoreHide Full Article
Crown Castle’s (CCI - Free Report) portfolio of wireless communication infrastructure assets in the United States positions it well to benefit from the high capital spending by wireless carriers to deploy 4G and 5G networks amid incremental customer demand, a rise in mobile data usage and spectrum availability. However, customer concentration and consolidation in the wireless industry are key concerns for the company. High interest rates add to its woes.
What’s Aiding It?
The exponential growth in mobile data usage, higher availability of spectrum and deployment of 5G networks at scale are driving significant network investments by carriers who aim to improve and densify their cell sites. With the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things and the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios, wireless data consumption is expected to increase considerably over the next several years.
As of the fourth quarter of 2023, Crown Castle remains well-positioned to capitalize on its unmatched portfolio of more than 40,000 cell towers and approximately 90,000 route miles of fiber in the top 100 basic trading areas of the United States.
The company’s investments in fiber and small cell business on the back of acquisitions, constructions and new deployments complement its tower business and offer meaningful upside potential to its 5G growth strategy. Management is working on increasing the small cell deployments and expects to deliver 16,000 new nodes in 2024.
Crown Castle is focused on maintaining a decent balance sheet position with sufficient liquidity. The company exited the fourth quarter of 2023 with cash and cash equivalents of $105 million. As of Dec 31, 2023, the net debt to last quarter’s annualized adjusted EBITDA was 5.3X. It has limited maturities through 2024, with a weighted average term to maturity of eight years. With investment-grade credit ratings of BBB, BBB+ and Baa3 from Standard & Poor’s, Fitch, and Moody’s, respectively, CCI is well-poised to capitalize on long-term growth opportunities.
Solid dividend payouts are arguably the biggest enticement for REIT shareholders and Crown Castle is committed to that. The company’s dividends are supported by high-quality, long-term contracted lease payments and it benefits from being a provider of mission-critical shared communication infrastructure assets. CCI has increased its dividend four times in the last five years and its five-year annualized dividend growth rate is 8.54%. Check Crown Castle’s dividend history here.
What’s Hurting It?
Customer concentration is very high for Crown Castle. As of Dec 31, 2023, around three-fourths of the company’s site rental revenues were derived from T-Mobile (36%), Verizon (19%) and AT&T (19%). The loss of any of these customers or consolidation among them will significantly affect the company’s top line. Moreover, any pullback or rationalization in network spending by carriers might affect Crown Castle’s performance.
CCI has a substantially leveraged balance sheet and a significant amount of debt relative to its cash flows. As of Dec 31, 2023, its debt and other long-term obligations aggregated $22.09 billion. Moreover, in an elevated interest rate environment, additional borrowings to fund near-term capital expenditures will not only inflate the company’s debt but also raise the cost of borrowings.
Management expects to incur interest expenses and amortization of deferred financing costs between $933 million and $978 million in 2024. With high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 13.5% compared with the industry’s rally of 14%.
Image: Bigstock
Here's Why You Should Retain Crown Castle (CCI) Stock Now
Crown Castle’s (CCI - Free Report) portfolio of wireless communication infrastructure assets in the United States positions it well to benefit from the high capital spending by wireless carriers to deploy 4G and 5G networks amid incremental customer demand, a rise in mobile data usage and spectrum availability. However, customer concentration and consolidation in the wireless industry are key concerns for the company. High interest rates add to its woes.
What’s Aiding It?
The exponential growth in mobile data usage, higher availability of spectrum and deployment of 5G networks at scale are driving significant network investments by carriers who aim to improve and densify their cell sites. With the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things and the rampant usage of network-intensive applications for video conferencing and cloud services and hybrid-working scenarios, wireless data consumption is expected to increase considerably over the next several years.
As of the fourth quarter of 2023, Crown Castle remains well-positioned to capitalize on its unmatched portfolio of more than 40,000 cell towers and approximately 90,000 route miles of fiber in the top 100 basic trading areas of the United States.
The company’s investments in fiber and small cell business on the back of acquisitions, constructions and new deployments complement its tower business and offer meaningful upside potential to its 5G growth strategy. Management is working on increasing the small cell deployments and expects to deliver 16,000 new nodes in 2024.
Crown Castle is focused on maintaining a decent balance sheet position with sufficient liquidity. The company exited the fourth quarter of 2023 with cash and cash equivalents of $105 million. As of Dec 31, 2023, the net debt to last quarter’s annualized adjusted EBITDA was 5.3X. It has limited maturities through 2024, with a weighted average term to maturity of eight years. With investment-grade credit ratings of BBB, BBB+ and Baa3 from Standard & Poor’s, Fitch, and Moody’s, respectively, CCI is well-poised to capitalize on long-term growth opportunities.
Solid dividend payouts are arguably the biggest enticement for REIT shareholders and Crown Castle is committed to that. The company’s dividends are supported by high-quality, long-term contracted lease payments and it benefits from being a provider of mission-critical shared communication infrastructure assets. CCI has increased its dividend four times in the last five years and its five-year annualized dividend growth rate is 8.54%. Check Crown Castle’s dividend history here.
What’s Hurting It?
Customer concentration is very high for Crown Castle. As of Dec 31, 2023, around three-fourths of the company’s site rental revenues were derived from T-Mobile (36%), Verizon (19%) and AT&T (19%). The loss of any of these customers or consolidation among them will significantly affect the company’s top line. Moreover, any pullback or rationalization in network spending by carriers might affect Crown Castle’s performance.
CCI has a substantially leveraged balance sheet and a significant amount of debt relative to its cash flows. As of Dec 31, 2023, its debt and other long-term obligations aggregated $22.09 billion. Moreover, in an elevated interest rate environment, additional borrowings to fund near-term capital expenditures will not only inflate the company’s debt but also raise the cost of borrowings.
Management expects to incur interest expenses and amortization of deferred financing costs between $933 million and $978 million in 2024. With high interest rates still in place, the dividend payout might seem less attractive than the yields on fixed-income and money market accounts.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have gained 13.5% compared with the industry’s rally of 14%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Ryman Hospitality Properties (RHP - Free Report) and STAG Industrial, Inc. (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for RHP’s 2024 funds from operations (FFO) per share is pegged at $8.03, suggesting year-over-year growth of 6.5%.
The Zacks Consensus Estimate for STAG’s 2024 FFO per share stands at $2.37, indicating an increase of 4.1% from the year-ago reported figure.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.