Crown Castle International Inc.
(
CCI
) is slated to release its third-quarter 2012 results on
Wednesday, October 24, after the closing bell. The current Zacks
Consensus Estimate for the third quarter is pegged at 14 cents,
representing a decline of 3.53% from the year ago quarter.
With respect to earnings surprise, Crown Castle has
outperformed the Zacks Consensus Estimate in all the last four
quarters with an average beat of 11.15%
Second-Quarter Performance
On July 25, 2012, CCI declared its financial results for the
second quarter of fiscal 2012 beating the Zacks Consensus
Estimates. Quarterly GAAP net income was approximately $116
million or 40 cents per share compared with a net income of $25.7
million or 9 cents per share in the year-ago quarter.
Second-quarter 2012 earnings per share of 40 cents surpassed the
Zacks Consensus Estimate by a penny.
Net revenue in the reported quarter was $585.5 million, up 17%
year over year, easily beating the Zacks Consensus Estimate of
$521 million. This growth was primarily attributable to improved
performance in the Site Rental segment.
Gross margin in the reported quarter was 70.7% compared with
70.6% in the year-ago quarter. Operating income was $203 million
compared with $167.1 million in the prior-year quarter.
Agreement of Estimate Revisions
In the last 30 days, one out of 17 estimates was revised
downward for the third quarter. Similarly, for the fourth
quarter, 2 out of 16 estimates moved south.
For 2012, in the last 30 days, 2 out of 18 estimates were
revised downward, while only one moved in the opposite direction.
For 2013, the estimate revision pattern was same as 2012.
Magnitude of Estimate Revisions
Over the last 30 days, the Zacks Consensus Estimate has
decreased by a penny to 14 cents for the third quarter of 2012.
Similarly, the estimate has decreased by a penny to 15 cents for
the fourth quarter of 2012.
For 2012, in the last 30 days, the Zacks Consensus Estimate
has declined by a penny to 87 cents for the third quarter of
2012. However, the estimate deteriorated by 4 cents to $1.12 for
2013.
Our Take
Recent acquisition of 7200 T-Mobile towers make Crown Castle
the largest wireless tower operator in the U.S. ahead of arch
rival
American Tower Corporation
(
AMT
). The acquisition will also enable Crown Castle to improve both
its top and bottom line. We believe significant growth of
wireless broadband, higher usage of smartphones and tablets
together with increased deployment of 4G LTE networks will boost
the demand for the company's towers going forward. Acquiring
privately held NextG Networks Inc. has placed Crown Castle as the
leading provider of Distributed Antenna Systems (DAS), which is
rapidly becoming a complementary solution to the large wireless
tower system. Additionally the company's tenancy ratio is just
1.25 which provides significant scope for Crown Castle to add
more customers without incurring additional capital
expenditure.
In view of the above mentioned positives we are maintaining
our long-term Outperform recommendation on Crown Castle. However,
the company holds a Zacks #3 Rank, implying a short-term Hold
rating on the stock.
AMER TOWER CORP (AMT): Free Stock Analysis
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CROWN CASTLE (CCI): Free Stock Analysis
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