It has been about a month since the last earnings report for American Tower (AMT). Shares have added about 8.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Tower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
American Tower Q1 AFFO Tops Estimate, Revenues Up Y/Y
American Tower reported first-quarter 2020 adjusted funds from operations (AFFO) per share of $2.12, beating the Zacks Consensus Estimate of $2.04. Further, the reported figure improved 15.2% year over year.
The company’s consolidated AFFO results include the impacts of a non-recurring cash interest expense charge of $63 million, resulting from the purchase of MTN's stake in each of the joint ventures in Ghana and Uganda. The company now owns the full ownership of the operations.
The company generated total revenues of $1.99 billion, which narrowly missed the Zacks Consensus Estimate of $2 billion. Nonetheless, the figure improved 9.9% year over year.
The company witnessed decent organic tenant billing growth. However, results were adversely impacted by Indian carrier consolidation-driven churn and non-recurrence of the Tata settlement, leading to an overall reduction in Indian contracted tenant revenues.
Quarter in Detail
Adjusted EBITDA in the reported quarter was $1,271 million, up 14.1% from the prior-year quarter. Adjusted EBITDA margin was 63.8% in the first quarter of 2020. Operating income was $736.8 million compared with the $614.9 million reported in the year-ago quarter.
During the first quarter, the company spent around $49 million to acquire 193 communications sites, primarily in international markets.
Cash Flow and Liquidity
In the first quarter of 2020, American Tower generated $800 million of cash from operating activities, up 1.9% year over year. Free cash flow during the period was $575 million, up 3.7% year over year.
At the end of the first quarter, the company had $4.2 billion of total liquidity. This comprised $1.3 billion in cash and cash equivalents, and availability of $2.9 billion under its revolving credit facilities (net of any outstanding letters of credit).
Quarterly revenues grossed $1,973 million, up 10.5% year over year. Operating profit was $1,306 million and operating profit margin was 66% during first-quarter 2020.
In the Property segment, revenues from the United States totaled $1,090 million, up 10.5% year over year. Further, total international revenues amounted to $883 million, up 10.5% year over year.
Within this, revenues from Asia totaled $287 million, edging down 0.8% year over year. Africa revenues grossed $226 million, up 56.6% year over year, while Europe revenues of $35 million improved 3% from the year-ago period. Latin America revenues totaled $337 million, improving 1% year over year.
Quarterly revenues totaled $20 million, down 27.4% year over year. Operating profit was $9 million and operating profit margin was 44% during the March-end quarter.
The company has revised its 2020 guidance on forex headwinds. In fact, for 2020, American Tower anticipates property revenues of $7,675-$7,825 million, suggesting growth rate of 3.8% at the mid-point. Adjusted EBITDA is projected to be $4,920-$5,020 million, indicating a mid-point growth rate of 4.8%. Consolidated AFFO is estimated to be $3,600-$3,700 million, suggesting a mid-point expansion of 3.7%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
At this time, American Tower 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, American Tower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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