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What Awaits SBA Communications (SBAC) This Earnings Season?

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SBA Communications Corporation (SBAC - Free Report) is scheduled to report first-quarter 2019 results on Apr 29, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of 4.2%. Notably, SBA Communications surpassed the Zacks Consensus Estimate in each of the last four quarters, with the average being 9%.

The communications tower operator is likely to report higher year-over-year revenues in both the operating segments on the back of solid domestic and international site leasing activity, excellent services, and cost control initiatives. Whether this can result into an earnings beat remains to be seen.

Let’s find out how things are shaping up prior to the announcement —

SBA Communications is well positioned to drive its business supported by strong customer activity in both domestic and international markets, coupled with a healthy U.S. backlog. Starting first quarter, the company owned or operated 29,578 communication sites, of which, 16,263 are located in the United States.

The Zacks Consensus Estimate for revenues from Site Leasing business, which accounts for the lion’s share of total revenues, is pegged at $451 million, up from $431 million reported in first-quarter 2018. While domestic site leasing revenues are expected to improve to $361 million from $342 million reported a year ago, international site leasing revenues are likely to increase to $92 million from $89 million.

Revenues from Site Development business are estimated to be $33 million compared with $27.8 million reported in the prior-year quarter. For the first quarter, the consensus estimate for total revenues stands at $482 million. The company reported $458 million in the year-earlier quarter. Adjusted funds from operations (AFFO) per share is pegged at $1.99. The company reported earnings of 27 cents per share in the prior-year quarter.

Also, operating profit from Site Leasing is expected to increase to $358 million from $338 million reported in the year-earlier quarter, while the same from Site Development is likely to improve to $7.5 million from $5.2 million.

SBA Communications believes that the synergies of robust customer demand, operational efficiency and strategic capital allocation will help it to enhance shareholder value by growth in AFFO. However, the company remains susceptible to earnings volatility due to unfavorable foreign currency movements on account of its geographically diverse scale of operations.

What Our Model Says

Our proven model does not conclusively show that SBA Communications is likely to beat earnings in the to-be-reported 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 this to happen. This is not the case here as you will see below:

Earnings ESP: SBA Communications’ Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at $1.99. 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 0.00% Earnings ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

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 in the quarter to be reported:

Molina Healthcare, Inc. (MOH - Free Report) with an Earnings ESP of +3.49% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

PotlatchDeltic Corporation (PCH - Free Report) with an Earnings ESP of +9.09% and a Zacks Rank #2.  

Portland General Electric Company (POR - Free Report) with an Earnings ESP of +5.26% and a Zacks Rank #2.  

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