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Is it Wise to Retain Crown Castle Stock in Your Portfolio for Now?
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Key Takeaways
CCI's 40,000-plus towers position it to benefit from rising U.S. wireless data demand.
High customer concentration poses risks, with 88% of rental revenue from the top three customers.
A $24.38 billion debt load and a 32.1% dividend cut may limit near-term investor appeal.
Crown Castle’s (CCI - Free Report) efforts to expand its tower business bode well amid the growing demand for wireless connectivity. A healthy balance sheet position will likely support its growth endeavors. However, customer concentration and consolidation in the wireless industry raise concerns. Substantial debt burden adds to its woes.
What’s Aiding Crown Castle Stock?
The wireless data consumption is expected to increase considerably over the next several years, driven by the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things, as well as the rampant usage of network-intensive applications for video conferencing, and cloud services and hybrid-working scenarios.
Given Crown Castle’s unmatched portfolio of more than 40,000 towers in each of the top 100 basic trading areas of the United States (as of the first quarter of 2025), it remains well-positioned to capitalize on this upbeat trend. Management expects a solid, stable level of demand for its tower assets in 2025.
CCI’s strong internally generated cash flow, supported by its tower segment, is impressive. The company has long-term tower lease agreements with top U.S. carriers, which contribute to recurring site rental cash flows over the long term. Moreover, a strong and creditworthy tenant base adds resiliency to its business.
CCI has sufficient liquidity and a decent balance sheet position. The company exited the first quarter of 2025 with cash and cash equivalents of $60 million. As of March 31, 2025, it had $7 billion of undrawn funds available under its senior unsecured revolving credit facility and a net debt-to-annualized adjusted EBITDA of 5.9x. Based on preliminary analysis, the company believes that its enhanced free cash flow profile, as a pure-play U.S. Tower business, will enable it to maintain an investment-grade credit rating with a target leverage between 6 and 6.5 times EBITDA.
Over the past six months, shares of this tower REIT, currently carrying a Zacks Rank #3 (Hold), have rallied 18.3% compared with the industry’s 6% increase.
Image Source: Zacks Investment Research
What’s Hurting Crown Castle Stock?
Customer concentration is very high for Crown Castle. As of March 31, 2025, around three-fourths of the company’s site rental revenues were derived from T-Mobile (40%), AT&T (27%) and Verizon (21%). Loss of any of these customers or consolidation among them will have a significant impact on the company’s top line.
Crown Castle has a substantially leveraged balance sheet and a significant amount of debt relative to its cash flows. The company’s debt and other long-term obligations aggregated $24.38 billion as of March 31, 2025.
Solid dividend payouts remain the biggest attraction for REIT investors. However, it has increased its dividend only three times in the last five years, which remains a concern. In May 2025, to increase free cash flow generation and enhance financial stability following the sale of the Fiber segment, the company announced a 32.1% reduction in its quarterly cash dividend payment. Hence, any significant turnaround in dividend payment is likely to remain elusive in the near term.
The Zacks Consensus Estimate for AMT’s 2025 FFO per share has moved 2 cents northward to $10.53 over the past two months.
The Zacks Consensus Estimate for MPW’s 2025 FFO per share has moved a cent northward to 57 cents over the past two months.
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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Is it Wise to Retain Crown Castle Stock in Your Portfolio for Now?
Key Takeaways
Crown Castle’s (CCI - Free Report) efforts to expand its tower business bode well amid the growing demand for wireless connectivity. A healthy balance sheet position will likely support its growth endeavors. However, customer concentration and consolidation in the wireless industry raise concerns. Substantial debt burden adds to its woes.
What’s Aiding Crown Castle Stock?
The wireless data consumption is expected to increase considerably over the next several years, driven by the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things, as well as the rampant usage of network-intensive applications for video conferencing, and cloud services and hybrid-working scenarios.
Given Crown Castle’s unmatched portfolio of more than 40,000 towers in each of the top 100 basic trading areas of the United States (as of the first quarter of 2025), it remains well-positioned to capitalize on this upbeat trend. Management expects a solid, stable level of demand for its tower assets in 2025.
CCI’s strong internally generated cash flow, supported by its tower segment, is impressive. The company has long-term tower lease agreements with top U.S. carriers, which contribute to recurring site rental cash flows over the long term. Moreover, a strong and creditworthy tenant base adds resiliency to its business.
CCI has sufficient liquidity and a decent balance sheet position. The company exited the first quarter of 2025 with cash and cash equivalents of $60 million. As of March 31, 2025, it had $7 billion of undrawn funds available under its senior unsecured revolving credit facility and a net debt-to-annualized adjusted EBITDA of 5.9x. Based on preliminary analysis, the company believes that its enhanced free cash flow profile, as a pure-play U.S. Tower business, will enable it to maintain an investment-grade credit rating with a target leverage between 6 and 6.5 times EBITDA.
Over the past six months, shares of this tower REIT, currently carrying a Zacks Rank #3 (Hold), have rallied 18.3% compared with the industry’s 6% increase.
Image Source: Zacks Investment Research
What’s Hurting Crown Castle Stock?
Customer concentration is very high for Crown Castle. As of March 31, 2025, around three-fourths of the company’s site rental revenues were derived from T-Mobile (40%), AT&T (27%) and Verizon (21%). Loss of any of these customers or consolidation among them will have a significant impact on the company’s top line.
Crown Castle has a substantially leveraged balance sheet and a significant amount of debt relative to its cash flows. The company’s debt and other long-term obligations aggregated $24.38 billion as of March 31, 2025.
Solid dividend payouts remain the biggest attraction for REIT investors. However, it has increased its dividend only three times in the last five years, which remains a concern. In May 2025, to increase free cash flow generation and enhance financial stability following the sale of the Fiber segment, the company announced a 32.1% reduction in its quarterly cash dividend payment. Hence, any significant turnaround in dividend payment is likely to remain elusive in the near term.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector include American Tower (AMT - Free Report) and Medical Properties Trust (MPW - 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 AMT’s 2025 FFO per share has moved 2 cents northward to $10.53 over the past two months.
The Zacks Consensus Estimate for MPW’s 2025 FFO per share has moved a cent northward to 57 cents over the past two months.
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.