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SBA Communications (SBAC) to Report Q4 Earnings: What's Up?

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SBA Communications Corporation SBAC is scheduled to report fourth-quarter and full-year 2019 results on Feb 20, after the closing bell. The company’s performance is likely to reflect year-over-year increases in both revenues and funds from operations (FFO) per share.

In the last reported quarter, this Boca Raton, FL-based communications tower REIT delivered a positive surprise of 3.37% in terms of funds from operations (FFO) per share. Results reflected year-over-year improvement in revenues. The top-line growth was supported by strong leasing and site development businesses.

For the trailing four quarters, SBA Communications has a decent surprise history, having beaten estimates on each occasion, the average positive beat being 3.63%. The graph below depicts this surprise history:

SBA Communications Corporation Price and EPS Surprise

SBA Communications Corporation Price and EPS Surprise

SBA Communications Corporation price-eps-surprise | SBA Communications Corporation Quote

Let’s see how things are shaping up for this announcement.

Factors at Play
SBA Communications is well positioned to drive its business supported by strong customer activity in both domestic and international markets, along with a healthy U.S. backlog. This is likely to have benefited the company in the quarter under consideration.

The communications tower operator’s quarterly performance is likely to have gained from solid domestic and international site leasing activity, though moderation might have occurred in the services business. Nevertheless, the company is focusing on accretive tower opportunities to create additional shareholder value.

Beginning third quarter, SBA Communications owned or operated owned or operated 30,904 communication sites, of which, 16,385 are located in the United States and its territories.

The Zacks Consensus Estimate for the Site Leasing business revenues, which account for the lion’s share of total revenues, is pegged at $478 million, up from the $445 million reported in fourth-quarter 2018. However, revenues from Site Development operations are estimated to be $29.57 million. The same was $39.1 million in the prior-year quarter.

For the December-end quarter, the consensus estimate for total revenues stands at $507.02 million, suggesting 4.8% increase year on year. Consequently, the estimate for adjusted funds from operations (AFFO) per share is pinned at $2.16, indicating an 8% year-over-year increase. This reflects the synergies of a favorable demand environment, operational efficiency and strategic capital allocation, which are likely to have aided the company’s performance.

Furthermore, operating profit from Site Leasing is expected be up to $382 million from $292 million reported in the year-earlier quarter. However, the same from Site Development is likely to come at $6.1 million, down from $10.3 million reported in the prior-year period.

For full-year 2019, SBA Communications expects AFFO per share of $8.31-$ 8.54 and revenues of $1,994.0-$2,014.0 million. The Zacks consensus Estimate for the same is currently pinned at $8.46, indicating 11.3% year-over-year increase on revenues of $2.01 billion.

Here is what our quantitative model predicts:

Our proven model does not conclusively predict a positive surprise in terms of FFO per share for SBA Communications this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although SBA Communications carries a Zacks Rank of 2, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks That Warrant a Look

Here are a few stocks in the REIT sector that you may want to consider, as our model shows that these have the right combination of elements to report a positive surprise this quarter:

Ventas, Inc. (VTR - Free Report) , slated to report fourth-quarter results on Feb 20, has an Earnings ESP of +0.81% and holds a Zacks Rank of 3, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Jernigan Capital, Inc. JCAP, scheduled to release earnings on Feb 26, has an Earnings ESP of +4.35% and currently carries a Zacks Rank of 3.

Urstadt Biddle Properties Inc. UBA, expected to release quarterly numbers around Mar 13, has an Earnings ESP of +1.41% and carries a Zacks Rank of 3, currently.

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