Back to top

Image: Bigstock

American Tower (AMT) to Report Q4 Earnings: What's In Store?

Read MoreHide Full Article

American Tower Corp. AMT is scheduled to release fourth-quarter and full-year 2019 results before the opening bell on Feb 25. The company’s results will likely reflect year-over-year declines in revenues and funds from operations (FFO) per share.

In the last reported quarter, this wireless communications towers operator surpassed its adjusted funds from operations (AFFO) estimates by 2.04%. Results indicated growth in revenues from property segment as well as improvement in adjusted EBITDA. Further, cash from operations for the September-end quarter improved on a year-over-year basis.

Over the trailing four quarters, the company surpassed estimates on three occasions and missed in the other. It delivered an average positive surprise of 2.37% during this period.

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

Factors at Play

With rising deployment of 5G by major mobile network carriers, American Tower has ramped up its investments in macro-tower constructions. This has strengthened the company’s core U.S. tower portfolio, and is expected to have helped witness decent leasing activity and organic tenant billings growth during the quarter under review.

Further, long-term tower leases with major wireless carriers and recurring nature of revenues from leasing and management of such networks are expected to have continued, providing a stable revenue source to the company.

However, the Indian carrier consolidation-driven churn might have eroded the Asian property segment’s performance during the quarter under consideration. In fact, the Zacks Consensus Estimate for quarterly revenues from Asian operations projects a 5.4% decline sequentially to $296 million. Geographic revenues from the company’s international portfolio are likely to display a 1.5% sequential decline to $814 million in the quarterly results.

Amid these, the Zacks Consensus Estimate for fourth-quarter 2019 revenues is pegged at $1.94 billion, indicating a year-over-year decline of 9.2%.

Moreover, American Tower’s activities during the quarter were inadequate to gain analyst confidence. In fact, the Zacks Consensus Estimate for fourth-quarter FFO per share remained unchanged at $1.90, over the past month. It also represents a decline of 20.8%, year on year.

For full-year 2019, American Tower anticipates property revenues of $7,420-$7,480 million, reflecting an improvement of 1.8% at the mid-point. Adjusted EBITDA is projected at $4,690-$4,730 million, indicating a mid-point increase of 0.9%. Consolidated AFFO is estimated in the $3,480-$3,520 million band, reflecting a mid-point contraction of 1.1%.

The Zacks Consensus Estimate for full-year FFO per share is currently pinned at $7.89, indicating a decline of 1.25% from the prior year on revenues of $7.59 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 American Tower 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 American Tower carries a Zacks Rank of 2, its Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Prologis, Inc. PLD currently carries a Zacks Rank of 2. The company’s funds from operations (FFO) per share estimate for 2020 has been revised 2.5% upward to $3.72 in a month’s time. The stock has rallied 9.2% in three months’ time.

Public Storage’s PSA Zacks Consensus Estimate for the current-year FFO per share remained unchanged at $10.99 over the past month. Shares of this Zacks #2 Ranked company have gained 8.3% over the past three months.

Boston Properties, Inc. BXP also carries a Zacks Rank of 2, currently. The company’s ongoing-year FFO per share estimate moved marginally north to $7.59 in a month’s time. The stock has rallied 6% in the past three months.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>