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American Tower (AMT) Up 0.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for American Tower (AMT - Free Report) . Shares have added about 0.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American Tower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

American Tower Q2 FFO & Revenues Top Estimates, View Up

American Tower reported solid results for the second quarter of 2018, wherein the bottom line and revenues surpassed the Zacks Consensus Estimate.

Consolidated AFFO came in at $844 million compared with $725 million in the year-ago quarter. AFFO per share came in at $1.90, beating the Zacks Consensus Estimate of $1.78. Further, this compares favorably to FFO of $1.68 per share reported in the prior year.  

The company posted total revenues of $1.78 billion, beating the Zacks Consensus Estimate of $1.75 billion. The figure increased 7.2% year over year.

Operating Metrics

Adjusted EBITDA in the reported quarter was $1,084 million, up 6.2% from the prior-year quarter. Adjusted EBITDA margin was 60.9% in the quarter under review. Selling, general, administrative and development expense totaled $157.9 million compared with $153.1 million incurred in the year-earlier quarter. Operating income was $546 million compared with $576.9 million in the year-ago quarter.

Cash Flow and Liquidity

In the second quarter of 2018, American Tower generated $940 million of cash from operations, up 18.2% year over year. Free cash flow in the reported quarter was $712 million, up 21.7% year over year.

At the end of the reported quarter, the company had $834.5 million in cash and cash equivalents and around $18,322 million of outstanding long-term debt compared with $802.1 million and $19,430.3 million, respectively, witnessed at the end of December 2017.

Property Segment

Quarterly revenues grossed $1,749 million, up 6.8% year over year. Operating profit was $1,104 million and operating profit margin was 63% in the April-June quarter.

In the Property segment, revenues from the United States totaled $957 million, up 6.7% year over year. Total international revenues amounted to $792 million, up 7% year over year. Within this, revenues from Asia totaled $308 million, up 4.5% year over year. EMEA revenues grossed $167 million, up 4.4% year over year. Latin America revenues totaled $318 million, up 10.8% year over year.

Services Segment

Quarterly revenues totaled $31.5 million compared with $24.4 million in the year-ago quarter. Operating profit was $16 million and operating profit margin was 50% in the reported quarter.

Outlook for 2018

For 2018, American Tower anticipates property revenues of $6,840 to $6,970 million, reflecting growth of 5.2% at the mid-point. Net income is expected between $1,275 million and $1,335 million, marking growth of 6.5% at the mid-point. Adjusted EBITDA is projected at $4,255-$4,315 million, indicating mid-point growth of 4.8%. Consolidated AFFO is expected in the range of $3,200-$3,260 million, reflecting mid-point growth of 11.3%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, American Tower has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

American Tower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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