A month has gone by since the last earnings report for American Tower (AMT - Free Report) . Shares have added about 4% in that time frame, outperforming 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 Beats Q3 FFO Estimates, Updates View
American Tower reported solid results for the third quarter of 2018, wherein AFFO and revenues surpassed the Zacks Consensus Estimates.
Consolidated AFFO came in at $821 million compared with $748 million reported in the year-ago quarter. The AFFO per share came in at $1.85, beating the Zacks Consensus Estimate of $1.82. Further, this compares favorably to AFFO of $1.73 per share reported in the last year.
The company posted total revenues of $1.79 billion, beating the Zacks Consensus Estimate of $1.77 billion. The figure improved 6.2% year over year.
Adjusted EBITDA in the reported quarter was $1,095 million, up 5.3% from the prior-year quarter. Adjusted EBITDA margin was 61.3% in the third quarter. Selling, general, administrative and development expenses totaled $177.9 million compared with $148 million incurred in the year-earlier quarter. Operating income was $567.2 million compared with $561.1 million reported in the year-ago quarter.
Cash Flow and Liquidity
In the third quarter of 2018, American Tower generated $753 million of cash from operations, up 15.3% year over year. Free cash flow in the quarter was $561 million, up 21.3% year over year.
At the end of the reported quarter, the company had $1,027 million in cash and cash equivalents, and around $18,423 million of outstanding long-term debt compared with $802.1 million and $19,430.3 million, respectively, witnessed at the end of December 2017.
Quarterly revenues grossed $1,785 million, up 6.2% year over year. Operating profit was $1,122 million and operating profit margin was 64% during the Jul-Sep period.
In the Property segment, revenues from the United States totaled $958 million, up 5.9% year over year. Total international revenues amounted to $794 million, up 7.1% year over year. Within this, revenues from Asia totaled $323 million, up 8.6% year over year. EMEA revenues grossed $167 million, up 7.1% year over year. Latin America revenues totaled $304 million, up 2% year over year.
Quarterly revenues totaled $34 million, up 34% year over year. Operating profit was $14 million and operating profit margin was 42% in the quarter under review.
Outlook for 2018
For 2018, American Tower anticipates property revenues of $7,200-$7,260 million, reflecting growth of 10.1% at the mid-point. Net income is expected between $1,285 million and $1,315 million, marking growth of 6.1% at the mid-point. Adjusted EBITDA is projected at $4,580-$4,620 million, indicating mid-point growth of 12.5%. Consolidated AFFO is estimated in the range of $3,470-$3,500 million, reflecting mid-point growth of 20.1%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 27.7% due to these changes.
Currently, American Tower has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, American Tower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.