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Is Beat in Store for American Tower (AMT) This Earnings Season?

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·4 min read
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American Tower Corp. AMT is scheduled to release second-quarter 2021 results before the opening bell on Jul 29. The company’s quarterly results will likely mirror year-over-year growth in revenues and funds from operations (FFO) per share.

In the previous quarter, the operator of wireless communication towers surpassed adjusted funds from operations (AFFO) estimates by 6.03%. The quarterly results reflected strong organic tenant billing growth, which was partly offset by declining revenues in the Asia Pacific property segment.

Over the preceding four quarters, American Tower topped the FFO per share estimate on three occasions and missed in the other, the average beat being 3.44%.

American Tower Corporation Price and EPS Surprise

American Tower Corporation Price and EPS Surprise
American Tower Corporation Price and EPS Surprise

American Tower Corporation price-eps-surprise | American Tower Corporation Quote

Let’s see how things have shaped up prior to this announcement.

During the second quarter, tower REITs like American Tower, Crown Castle International Corp CCI and SBA Communications SBAC are likely to have benefited from secular growth trends in the wireless industry. As data volume for wireless and wired networks has been growing rapidly amid the widespread adoption of smartphones and applications, network carriers continued their spending on network deployments during the same time frame in a bid to harness spectrum abilities as well as improve and densify cell sites and coverage.

As for American Tower, the company’s unmatched geographically-diversified portfolio of distributed sites is likely to have enabled it to enjoy stellar demand for its assets.

The company has been ramping up its investments in the international market and fortifying the global footprint through acquisitions and constructions. These expansion efforts have helped American Tower scale its presence in Europe and are expected to have aided during the soon-to-be-reported quarter. The Zacks Consensus Estimate for International Property Revenue is pegged at $934 million, indicating growth of 15.9% from the year ago reported figure.

In May, management rewarded its investors with a 2.4% sequential hike in quarterly dividend on the company’s common shares. Given this, we expect American Tower’s financial position and liquidity to have been strong during the quarter under review.

Last month, the company closed the first tranche of its proposed Telxius Towers acquisition. The first tranche comprised roughly 20,000 communications sites in Germany and Spain. The tranche has likely driven revenues from this property. The Zacks Consensus Estimate for operating revenues from the property segment is pegged at $2.15 billion, indicating growth of 13.6% from the year-ago period.

The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $2.2 billion, indicating a rise of 14.9% from the year-earlier period.

Prior to the second-quarter earnings release, American Tower’s activities were adequate to gain adequate analyst confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally upward to $2.34 over the past month. It suggests a year-over-year increase of 13%.

However, tower operations in the emerging markets are not as profitable as that in the mature U.S. markets. The operating profit margins from international businesses might have been less compared to the U.S. segment. Moreover, elevated churn in certain emerging markets where the company operates is expected to have been deterrent.

Any fluctuations in the foreign-currency exchange rate, which erode property revenues, might have hurt the company during the quarter in discussion.

What the Zacks Model Predicts

Per our quantitative model, American Tower has the right combination of two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of a FFO beat this quarter.

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 +1.67%.

Zacks Rank: American Tower currently carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks That Warrants a Look

Here is another stock from the REIT sector that you may want to consider, as our model shows that it has the right combination of elements to report a surprise this quarter:

Duke Realty Corp. DRE, slated to release second-quarter earnings on Jul 28, has an Earnings ESP of +0.47% and carries a Zacks Rank of 3, at present.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Tower Corporation (AMT) : Free Stock Analysis Report

Crown Castle International Corporation (CCI) : Free Stock Analysis Report

Duke Realty Corporation (DRE) : Free Stock Analysis Report

SBA Communications Corporation (SBAC) : Free Stock Analysis Report

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