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What's in the Cards for Crown Castle (CCI) This Earnings Season?

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Crown Castle International Corp. CCI is scheduled to release second-quarter 2021 results on Jul 21, after the closing bell. The company’s quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.

The Houston-based real estate investment trust (REIT) surpassed the Zacks Consensus Estimate in terms of adjusted funds from operations (AFFO) per share by 6.2% in the last reported quarter. Increase in site-rental revenues aided the top-line performance.

Over the preceding four quarters, Crown Castle surpassed the FFO per share estimates on three occasions and missed in the other, the average beat being 11.51%. This is depicted in the graph below:

Crown Castle International Corporation Price and EPS Surprise

Crown Castle International Corporation Price and EPS Surprise
Crown Castle International Corporation Price and EPS Surprise

Crown Castle International Corporation price-eps-surprise | Crown Castle International Corporation Quote

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

Factors to Note

During the second quarter, tower REITs like Crown Castle, American Tower Corp. AMT 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.

Crown Castle’s extensive portfolio of more than 40,000 towers is spread across the top 100 markets in the United States. This portfolio has been attracting businesses from carriers that are seeking network expansion and densification amid the growing mobile-data scenario.

The company has been making efforts to fortify its communication infrastructure footprint. It has been investing considerably in its fiber segment through acquisitions, and construction of small cells and fiber. With an enhanced focus on small-cell leasing, along with its urban skew and ability to offer a holistic network solution, Crown Castle has a competitive edge over other tower companies.

Long-term (typically 5-15 year) tower lease agreements with top U.S. carriers are anticipated to have contributed to recurring site rentals during the June-end quarter. The consensus estimate for net revenues from site rentals is pegged at $1.42 billion for the second quarter, suggesting 8% year-over-year growth.

Increased tower activity, backed by tailwinds, is likely to have supported Crown Castle’s network services revenues in the second quarter. In fact, the consensus estimate for net revenues from the network services and other segment is pinned at $137 million for the quarter under review, suggesting a 13.2% year-over-year jump.

Additionally, the Zacks Consensus Estimate for second-quarter revenues is pegged at $1.56 billion, indicating year-over-year growth of 8.2%.

However, with higher towers activity, the company is likely to have seen elevated costs during the second quarter.

Prior to the second-quarter earnings release, there is a lack of any solid catalyst for becoming optimistic about the company’s business activities and prospects. The Zacks Consensus Estimate of FFO per share for the second quarter has remained unchanged at $1.66 over the past 30 days. Nevertheless, it calls for a 14.5% increase from the prior-year quarter’s reported figure.

Here is what our quantitative model predicts:

Crown Castle does not have 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.

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 Crown Castle is -2.22%.
Zacks Rank: It currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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.

Stocks That Warrant a Look

Here is another stock from the REIT sector that you may want to consider, as our model shows that these have 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.


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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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