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Crown Castle (CCI) Up 12.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Crown Castle (CCI - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Crown Castle 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.

Crown Castle’s Q2 FFO & Revenues Trump Estimates, View Up

Crown Castle’s second-quarter 2019 adjusted funds from operations (AFFO) per share of $1.48, up from the prior-year figure of $1.31. Further, the reported figure surpassed the Zacks Consensus Estimate of $1.43.

Results reflect benefits from the company’s extensive tower portfolio, high demand for infrastructure and healthy leasing activity. The year-over-year increase in the bottom line reflects growth in site-rental revenues.

Net revenues for the reported quarter amounted to $1.48 billion, suggesting 11.1% year-over-year growth. Moreover, the reported figure outpaced the Zacks Consensus Estimate of $1.43 billion.

Site-rental revenues came in at $1,238 million, up 6% year over year, which included organic growth, as well as contributions from straight-lined revenues. Particularly, site-rental revenues during the April-June quarter recorded 5.7% organic growth, driven by strong new leasing activity, as well as contracted tenant escalations.

Operating Metrics

Quarterly operating income increased around 21.4% from the prior-year quarter to $419 million. However, operating expenses flared up 7.5% year over year to nearly $1.06 billion. Quarterly adjusted EBITDA was approximately $857 million, representing year-over-year jump of 11%.

Cash Flow and Liquidity

Crown Castle exited second-quarter 2019 with cash and cash equivalents of $288 million, up from the $277 million reported at the end of 2018. Furthermore, as of Jun 30, 2019, the company generated around $1.2 billion of net cash from operating activities compared with $1.1 billion reported in the year-ago period.

Also, debt and other long-term obligations aggregated approximately $17.5 billion, up from $16.6 million witnessed at the end of 2018.

Dividend Payout

During the June-end quarter, Crown Castle paid common stock dividend of $1.125 per common share, up approximately 7% from the year-earlier quarter.

2019 Outlook

Crown Castle has raised its outlook for full-year 2019. The company expects site-rental revenues of $4,950 million to $4,980 million up from $4,939 million-$4,984 million provided earlier. Adjusted EBITDA is projected at $3,393 million-$3,423 million up from the $3,344 million-$3,389 million estimated earlier.

Meanwhile, FFO is anticipated in the $2,363-$2,393 million range (previously $2,293 million-$2,338 million). Also, AFFO is projected at $2,464-$2,494 million as compared with the previously-issued guidance of $2,413-$2,458 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Crown Castle has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise Crown Castle has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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