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SBA Communications Corporation Just Missed EPS By 56%: Here's What Analysts Think Will Happen Next

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SBA Communications Corporation (NASDAQ:SBAC) last week reported its latest third-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like a pretty bad result, all things considered. Although revenues of US$523m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 56% to hit US$0.20 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for SBA Communications

earnings-and-revenue-growth
earnings-and-revenue-growth

After the latest results, the 16 analysts covering SBA Communications are now predicting revenues of US$2.20b in 2021. If met, this would reflect an okay 6.8% improvement in sales compared to the last 12 months. SBA Communications is also expected to turn profitable, with statutory earnings of US$2.87 per share. Before this earnings report, the analysts had been forecasting revenues of US$2.21b and earnings per share (EPS) of US$2.83 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$326, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on SBA Communications, with the most bullish analyst valuing it at US$358 and the most bearish at US$190 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the SBA Communications' past performance and to peers in the same industry. The analysts are definitely expecting SBA Communications' growth to accelerate, with the forecast 6.8% growth ranking favourably alongside historical growth of 5.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.9% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that SBA Communications is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on SBA Communications. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple SBA Communications analysts - going out to 2024, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for SBA Communications you should be aware of, and 1 of them makes us a bit uncomfortable.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.