American Tower (AMT) to Report Q1 Earnings: What's in Store?
American Tower Corp. AMT is scheduled to release first-quarter 2020 results before the opening bell on Apr 29. The company’s results will likely reflect year-over-year increases 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 2.63%. The company witnessed decent organic tenant billing growth.
Over the trailing four quarters, the company surpassed estimates on three occasions and missed in the other, the average positive surprise being 1.94%.
American Tower Corporation (REIT) Price and EPS Surprise
American Tower Corporation (REIT) price-eps-surprise | American Tower Corporation (REIT) Quote
Let’s see how things have shaped up prior to this announcement.
Factors at Play
American Tower has ramped up its investments in macro-tower constructions given the rising deployment of 5G by major mobile network carriers. This has strengthened the company’s core U.S. tower portfolio, and is anticipated to have helped witness decent leasing activity and organic tenant billings growth during the quarter.
Further, long-term tower leases with major wireless carriers, and the recurring nature of revenues from leasing and management of such networks are likely to have continued, providing a stable revenue source to the company. It is also likely to have benefited from focus on margin expansion backed by the combination of organic growth and efficiencies throughout the business.
The Zacks Consensus Estimate for first-quarter 2020 revenues is pegged at $2 billion, indicating a year-over-year increase of 10.4%. Geographic revenues from the company’s international portfolio are likely to display a 7.9% sequential increase to $873 million.
However, American Tower experienced deceleration in its U.S. new business commencements and pipeline due to lower activity level from T-Mobile and Sprint, as the firms proceeded through their merger approval process. Although a court affirmation of the deal has taken place, a rebound in activity is unlikely in the first half of the year. As such, new business activity is expected to have remained moderated in the first quarter.
Moreover, though the Indian carrier consolidation-driven churn has largely subsided, some additional churn is expected because of the India Supreme Court ruling on the definition of adjusted gross revenues. Also, India is expected to have witnessed a lower level of gross new business, as carriers are unlikely to make near-term network investments. The Zacks Consensus Estimate of $291 million for quarterly revenues from Asian operations indicates a marginal decline from the prior quarter’s $295 million.
American Tower’s activities during the quarter were inadequate to gain adequate analyst confidence. In fact, the Zacks Consensus Estimate for first-quarter FFO per share remained unchanged at $1.86, over the past month. Nonetheless, it represents an increase of 1.1% year on year.
Here is what our quantitative model predicts:
American Tower does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for American Tower is -38.58%.
Zacks Rank: American Tower currently carries a Zacks Rank of 3.
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:
SBA Communications Corporation SBAC, set to report quarterly numbers on May 5, has an Earnings ESP of +0.44% and carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CoreSite Realty Corporation COR, slated to release first-quarter earnings on Apr 30, has an Earnings ESP of +3.19% and carries a Zacks Rank of 3 at present.
Americold Realty Trust COLD, expected to release earnings results on May 7, has an Earnings ESP of +9.74% and currently holds a Zacks Rank #3.
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.
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