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It has been about a month since the last earnings report for Crown Castle (CCI). Shares have added about 3.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Crown Castle 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 drivers.
Crown Castle Beats Q2 FFO Estimates, Raises '21 Guidance
Crown Castle’s second-quarter 2021 adjusted FFO (AFFO) per share of $1.71 surpassed the Zacks Consensus Estimate of $1.66. Moreover, the figure came in 17.9% higher than the year ago quarter’s $1.45.
Net revenues of $1.58 billion improved 9.9% year over year in the reported quarter. Further, the reported figure beat the Zacks Consensus Estimate of $1.56 billion.
Growth in site-rental revenues aided the top-line performance. The company also raised the outlook for 2021, backed by contribution from additional straight-lined revenues and an appreciation in the expected services contribution to be generated from higher towers activity than previously estimated.
Per management, "Capitalizing on the momentum created by a robust 5G leasing environment, we were able to deliver another solid quarter in the second quarter and increase our full year 2021 Outlook for AFFO per share growth to 12%".
Quarter in Detail
Site-rental revenues came in at $1.4 billion, up 8% year over year. The organic contribution of $70 million to site rental revenues reflects 5.3% year-over-year growth. Further, services and other revenues rose 30.6% year over year to $158 million.
Quarterly operating expenses flared up 2% year over year to $1.08 billion. The operating income climbed 31.9% year over year to $505 million. Quarterly adjusted EBITDA of $958 million marked a 15.3% year-over-year rise.
The company reported a capital expenditure of $308 million for the second quarter. This included $289 million of discretionary capital expenditure and $19 million of sustaining capital expenditure.
Crown Castle exited second-quarter 2021 with cash and cash equivalents of $339 million, up from the $232 million reported at the end of Dec 31, 2020.
Also, debt and other long-term obligations aggregated $20 billion, up from the $19.1 billion witnessed at the end of 2020.
The company has raised its outlook for 2021. The AFFO per share is anticipated to be $6.78-$6.89. Management estimates site-rental revenues of $5,677-$5,722 million. Adjusted EBITDA is projected at $3,764-$3,809 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
At this time, Crown Castle has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 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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