After American Tower Corporation (REIT)’s (NYSE:AMT) earnings announcement in September 2017, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 31.28% in the upcoming year against the past 5-year average growth rate of 13.16%. By 2018, we can expect AMT’s bottom line to reach $1,115.0M, a jump from the current $849.3M. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for AMT in the longer term. For those interested in more of an analysis of American Tower (REIT), you can research its fundamentals here. See our latest analysis for AMT
How is AMT going to perform in the near future?
The 18 analysts covering AMT view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of AMT’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 17.23% based on the most recent earnings level of $849.3M to the final forecast of $1,553.9M by 2020. This leads to an EPS of $4.68 in the final year of projections relative to the current EPS of $2. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. In 2020, AMT’s profit margin will have expanded from 14.68% to 21.91%.
Future outlook is only one aspect when you’re building an investment case for a stock. For American Tower (REIT), there are three key factors you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is AMT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AMT is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AMT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.