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What's in Store for American Tower (AMT) This Earnings Season?

While American Tower's (AMT) Q3 results will likely reflect gains from the high tower space demand amid a high carrier network spending, elevated churn in certain emerging markets might have...

This story originally appeared on Zacks

American Tower Corp. AMT is scheduled to release third-quarter 2021 results before the opening bell on Oct 28. The company’s results will likely highlight year-over-year growth in revenues and funds from operations (FFO) per share.

- Zacks

In the last quarter, the operator of wireless communication towers surpassed the adjusted funds from operations (AFFO) per share estimates by 3.42%. The quarterly results reflected strong organic tenant billing growth and improving revenues across all the property segments.

Over the preceding four quarters, American Tower topped the FFO per share estimate on three occasions and missed in the other, the average beat being 4.05%.

American Tower Corporation Price and EPS Surprise

American Tower Corporation Price and EPS Surprise

American Tower Corporation price-eps-surprise | American Tower Corporation Quote

Let’s see how things have shaped up prior to this announcement.

During the third quarter, tower REITs like American Tower Corp., Crown Castle CCI and SBA Communications SBAC are likely to have benefited from the secular growth trends in the wireless industry. As the data volume for the wireless and wired networks has been growing rapidly amid the widespread adoption of smartphones and applications, the network carriers continued to spend on network deployments, in a bid to harness spectrum abilities as well as improve and densify their cell sites and coverage.

As for American Tower, the company’s unmatched geographically-diversified portfolio of distributed sites has been attracting businesses from carriers that are seeking network expansion and densification amid the growing mobile-data scenario.

The company has been ramping up its investments in the international market and fortifying the global footprint through acquisitions and developments. These expansion efforts have helped American Tower scale its presence in Europe and are anticipated to have aided during the soon-to-be-reported quarter.

The Zacks Consensus Estimate for operating revenues from the property segment is pegged at $2.33 billion, indicating growth of 4.7% from the prior quarter. While the Zacks Consensus Estimate for operating revenues from the service segment is pegged at $61 million, indicating decline of 7.6% from the prior quarter.

The Zacks Consensus Estimate for third-quarter 2021 revenues is pegged at $2.4 billion, indicating a rise of 19.3% from the year-earlier period.

American Tower’s financial position and liquidity is expected to have been strong during the quarter under review.

However, prior to the third-quarter earnings release, American Tower’s activities were inadequate to gain analyst confidence. The Zacks Consensus Estimate for quarterly FFO per share has been revised marginally downward to $2.33 over the past two months. Nonetheless, it suggests a year-over-year increase of 4.5%.

The tower operations in the emerging markets are not as profitable as that in the mature U.S. markets. The operating profit margins from international businesses might have been less compared to the U.S. segment.

Moreover, elevated churn in certain emerging markets, where the company operates, is expected to have been a deterrent.

What the Zacks Model Predicts

We cannot conclusively predict that American Tower will beat the Zacks Consensus Estimate this time. This is because the company doesn't 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 Earnings ESP for American Tower is 0.00%.

Zacks Rank: American Tower currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A Stock That Warrants a Look

Here is a stock from the REIT sector that you may want to consider, as our model shows that it has the right combination of elements to report a surprise this quarter:

Apple Hospitality REIT APLE, slated to release third-quarter earnings on Nov 4, has an Earnings ESP of +26.67% and sports a Zacks Rank of 1, at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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American Tower Corporation (AMT): Free Stock Analysis Report


Crown Castle International Corporation (CCI): Free Stock Analysis Report


SBA Communications Corporation (SBAC): Free Stock Analysis Report


Apple Hospitality REIT, Inc. (APLE): Free Stock Analysis Report


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