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Crown Castle (CCI) Down 4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·3 min read

It has been about a month since the last earnings report for Crown Castle (CCI). Shares have lost about 4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Crown Castle due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Crown Castle’s Q2 FFO Misses Estimates, Revenues Down

Crown Castle's second-quarter 2020 AFFO per share of $1.45 missed the Zacks Consensus Estimate of $1.48. Nonetheless, the figure comes in 3% higher than the prior-year quarter tally.

Net revenues of $1.44 billion edged down 0.5% year on year in the reported quarter. The revenue figure was almost in line with the Zacks Consensus Estimate.

Services and other revenues declined during the quarter. This hindered top-line growth. The company also maintained the current-year outlook despite the prevailing uncertainties related to the coronavirus pandemic.

Quarter in Detail

Site-rental revenues came in at $1.3 billion, up 4.4% year over year. The $69 million in organic contribution to site rental revenues reflects 5.6% growth. However, services and other revenues plunged 34.2% year over year to $121 million.

Quarterly operating income decreased 1.5% year over year to $383 million. Yet, operating expenses remained flat year over year at $1.1 billion. Quarterly adjusted EBITDA of $831 million marked marginal year-over-year growth.

The company reported capital expenditures of $414 million during the second quarter. This included $390 million of discretionary capital expenditures and $24 million of sustaining capital expenditures.

Balance Sheet

Crown Castle exited second-quarter 2020 with cash and cash equivalents of $2.5 billion, up from the $196 million reported at the end of 2019.

Furthermore, as of Jun 30, 2020, the company generated $1.4 billion of net cash from operating activities compared with the $1.2 billion reported in the year-ago period.

Also, debt and other long-term obligations aggregated $21 billion, up from the $18 billion witnessed at the end of 2019.

2020 Outlook

Crown Castle has maintained its outlook for 2020. The company expects site-rental revenues of $5,337-$5,382 million. Adjusted EBITDA is projected at $3,479-$3,524 million. AFFO is projected at $2,572-$2,617 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Crown Castle has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Crown Castle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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