Here’s why it’s wise to buy Crown Castle (CCI) shares now
Crown Castle International Corp. CCI is well positioned to take advantage of favorable winds, such as growth in mobile data usage, spectrum availability and high network investments in wireless carriers. CCI is likely to grow, given its ability to deliver a holistic network solution with towers, fiber optics and small cells, and high liquidity.
Wireless services are advancing rapidly in terms of additional features and capabilities. Additionally, wireless data consumption is expected to increase dramatically over the next several years, driven by increased innovation and adoption of data-driven mobile devices and applications, such as machine connections. machine, social media and video streaming.
As the data volume of wireless and wireline networks grows rapidly, network operators continue to spend more on network deployments to harness spectrum capabilities as well as to improve and densify their cell sites and coverage.
Additionally, a strong and creditworthy tenant base adds resilience to Crown Castle’s business. CCI has long-term tower leases (typically 5 to 15 years) with major US carriers, which contribute to the recurring cash flow from the long-term site rental.
In addition, Crown Castle has sufficient liquidity and enjoys a decent balance sheet position. CCI left the third quarter of 2021 with cash and cash equivalents of $ 357 million and $ 5 billion of unused capacity in its revolver. At the end of the third quarter, CCI had investment-grade credit ratings of BBB-, BBB + and Baa3 from Standard & Poor’s, Fitch and Moody’s, respectively, facilitating its access to the debt markets on attractive terms.
Crown Castle shares currently ranked 2 (buy) by Zacks have appreciated 20.5% over the past three months, outperforming the industry rally by 14.9%. However, the revised trend in the 2021 Funds-From-Operations (FFO) per share estimates does not indicate a favorable outlook for CCI as they have been stable over the past month. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
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However, the tenant concentration is very high for Crown Castle. Indeed, the first three among its customers, namely Verizon VZ, AT&T T and T Mobile TMUS, accounted for the majority of its total revenues.
Therefore, the loss of Verizon, AT&T and T-Mobile or any consolidation between the three will significantly hamper Crown Castle’s revenue. CCI’s performance is dependent on operator spending and therefore any decline or rationalization of network spending by tenants could dampen its growth.
Zacks’ consensus estimate for Verizon earnings per share in 2021 has moved northward slightly over the past month. VZ is currently ranked Zacks # 3 (Hold).
Over the past four quarters, Verizon’s earnings per share have broken the consensus mark on every occasion, with the average surprise being 3.73%.
VZ shares are down 3.8% in the past three months compared to the industry’s 6.2% decline.
Zacks’ consensus estimate for AT&T earnings per share in 2021 has moved northward slightly over the past two months. T is currently a ranked # 3 player.
AT & T’s earnings per share have broken the consensus mark over the past four quarters, with an average surprise of 10.02%. T shares are down 7% in the past three months compared to the industry’s 6.2% drop.
Zacks’ consensus estimate for T-Mobile’s earnings per share in 2021 has moved southward slightly over the past month. TMUS is currently a # 3 ranked player.
T-Mobile’s earnings per share have broken the consensus mark over the past four quarters, with an average surprise of 55.3%. TMUS shares are down 8.8% in the past three months compared to the industry’s 6.2% drop.
To note: Everything related to earnings presented in this valuation represents funds from operations (FFOs) – a measure widely used to assess the performance of REITs.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.