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What's in the Offing for American Tower's (AMT) Q1 Earnings?

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In this article:
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American Tower Corp. AMT is scheduled to release first-quarter 2019 results before the opening bell on May 3. The company’s results will likely reflect year-over-year rise in its funds from operations (FFO) per share and revenues.

In the last reported quarter, this wireless communications towers operator surpassed its adjusted funds from operations (AFFO) estimates by 4.3%. The company posted total revenues of $2.13 billion, beating the Zacks Consensus Estimate of $2.02 billion.

Over the trailing four quarters, the company surpassed estimates on three occasions and missed on the other. It delivered an average positive surprise of 2.76% during this period.

American Tower Corporation (REIT) Price and EPS Surprise

American Tower Corporation (REIT) Price and EPS Surprise | American Tower Corporation (REIT) Quote

Let’s see how things are shaping up prior to this announcement.

Factors at Play

American Tower has been making strategic efforts to expand its footprint in the United States and international markets. Notably, increased use of mobile data is fueling demand for space on the company’s telecom towers. Also, with higher investments in 4G and the upcoming 5G technology, wireless carriers are densifying their network. This is expected to enable American Tower to witness splendid leasing activity and organic tenant billings growth in the quarter under review.

Further, global demand drivers and secular growth tailwinds in the wireless industry are expected to boost the company’s revenues from colocation and amendment.

Additionally, solid business-model fundamentals will bolster the company’s quarterly performance. Specifically, American Tower generates solid recurring revenues from its long-term leases that have embedded rent escalators. We anticipate this to provide stable cash flows in the first quarter.

In fact, the Zacks Consensus Estimate for first-quarter 2019 revenues is pegged at $1.8 billion and indicates year-over-year growth of 3.27%. 

Moreover, we anticipate the company’s disciplined capital-allocation strategy to drive impressive return on invested capital (ROIC) and support results in the first quarter. Furthermore, in March, it announced a 7.1% hike in first-quarter 2019 dividends. 

However, consolidation in the wireless industry remains a concern for American Tower. Specifically, the Indian carrier consolidation-driven churn is expected to mar growth in organic tenant billings and result in revenues lost from cancellations.

In addition, as carriers are looking for opportunities to rationalize spending, merger between the company’s major customers remains a near-term headwind. Also, a high-leveraged balance sheet remains another concern for the company.

Lastly, American Tower’s activities during the quarter could not gain adequate analyst confidence. In fact, the Zacks Consensus Estimate for first-quarter FFO per share remained unchanged at $1.86, over the past month. Nonetheless, it represents year-over-year growth of 7.5%.

Earnings Whispers

Here is what our quantitative model predicts:

American Tower 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 an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company’s Earnings ESP is 0.00%.

Zacks Rank: It currently carries a Zacks Rank of 3 which increases the predictive power of ESP. However, we also need a positive ESP to be confident of a positive surprise.

Stocks That Warrant a Look

Several other players in REIT space are lined up to report their financial results. Below are three stocks, poised to beat on earnings per the proven Zacks model. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lexington Realty Trust LXP, scheduled to release earnings on May 8, has an Earnings ESP of +2.44% and currently carries a Zacks Rank of 2.

Park Hotels & Resorts Inc. PK, slated to report first-quarter results on May 9, has an Earnings ESP of +0.24% and holds a Zacks Rank of 2, at present.

National Storage Affiliates Trust NSA, set to report quarterly numbers on May 2, has an Earnings ESP of +0.92% and carries a Zacks Rank of 3, currently.

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.

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American Tower Corporation (REIT) (AMT) : Free Stock Analysis Report
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