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Will SBA Communications (SBAC) Beat Q2 Earnings on Leasing?

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SBA Communications Corporation (SBAC - Free Report) is scheduled to report second-quarter 2018 results after the closing bell on Jul 30. The company is likely to report higher revenues in both the operating segments due to healthy growth dynamics.

Whether this could result into an earnings beat for the quarter remains to be seen.

Top-Line Expansion

Mobile subscriber growth has significantly boosted the wireless tower industry. SBA Communications is expanding its tower portfolio while seeking new growth opportunities through enhancement of its scale of operations in international markets. It is offering wireless service providers assistance in developing networks.

The Zacks Consensus Estimate for revenues from Site Leasing segment, which accounts for the lion’s share of total revenues, is currently pegged at $431 million, up from $403 million reported in second-quarter 2017. Revenues from Site Development segment are expected to be $27.6 million compared with $24.3 million reported in the prior-year quarter. Consequently, total revenues for the quarter are likely to be $457 million, up from $427 million reported in the year-earlier quarter. Adjusted earnings per share are pegged at 18 cents, slightly down from 19 cents reported a year ago.

Other Key Factors

Operating profit from Site Leasing in the quarter is expected to increase to $339 million from $314 million reported in the year-earlier quarter, while the same from Site Development is likely to improve to $4.9 million from $4.3 million.

However, the company’s financials are likely to be affected by high customer concentration and consolidation in the wireless industry.

What Our Model Says

Our proven model does not conclusively show that SBA Communications is likely to beat earnings this quarter as it does not possess one of the two key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for an earnings beat. This is not the case here as you will see below:  

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -12.09%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

SBA Communications Corporation Price and EPS Surprise

Zacks Rank: SBA Communications currently has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP acts as a spoiler.

We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Boston Beer Company, Inc. (SAM - Free Report) has an Earnings ESP of +13.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Columbia Sportswear Company (COLM - Free Report) has an Earnings ESP of +24.25% and a Zacks Rank #2.

Eastman Chemical Company (EMN - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #2.   

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