It has been about a month since the last earnings report for Crown Castle (CCI). Shares have added about 6.7% 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 catalysts.
Crown Castle Misses Q4 FFO Estimates, Raises '19 View
Crown Castle fourth-quarter 2018 AFFO per share of $1.42 compares favorably with the prior-year figure of $1.25. However, the figure missed the Zacks Consensus Estimate which was pegged at $1.44.
The year-over-year increase reflects growth in site rental revenues. Also, the company has raised its outlook for 2019.
Net revenues for the fourth quarter amounted to $1.42 billion and marked 14.6% year-over-year growth. Moreover, the reported figure comes in marginally ahead of the Zacks Consensus Estimate of $1.40 billion.
Site rental revenues came in at $1,209 million, up 15% year over year, which included organic growth, as well as contributions from acquisitions and other items. Particularly, site rental revenues in the Oct-Dec quarter recorded 5.6% organic growth, driven by strong new leasing activity, as well as contracted tenant escalations. Further, services and other revenues came in at $210 million, up 12.3% year over year.
For full-year 2018, the company’s adjusted FFO per share came in at $5.48, up 12.8% year over year. This was achieved on 24.5% year-over-year growth in revenues to $5.4 billion.
Quarterly operating income jumped 40.9% from the prior-year quarter to $379 million. However, operating expenses escalated 7.3% year over year to $1,040 million. Quarterly adjusted EBITDA was approximately $816 million, representing year-over-year increase of 15%.
Cash Flow and Liquidity
Crown Castle exited 2018 with cash and cash equivalents of $277 million, down from $314 million reported at the end of 2017. Furthermore, as of Dec 31, 2018, the company generated around $2.5 billion of net cash from operating activities compared with $2.0 billion reported in the year-ago period.
Also, debt and other long-term obligations aggregated approximately $16,575 million, up from $16,044 million at the end of 2017.
Crown Castle has raised its outlook for full-year 2019. The company expects site rental revenues of $4,939-$4,984 million, denoting a projected increase of $41 million at the mid-point from the previously-issued outlook. Adjusted EBITDA is anticipated in the band of $3,344-$3,389 million, reflecting an uptick of $41 million at the mid-point.
Meanwhile, FFO is anticipated in the $2,293-$2,338 million band, while AFFO is projected at $2,413-$2,458 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Crown Castle has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward 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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