Following the first quarter earnings announcement on May 3, most
of the analysts covering
American Tower Corp
) have revised their estimates.
The brokers have revised their estimates based on the belief
that the company will do well based on the strong demand for tower
leasing to support high-speed wireless voice, data and on-demand
video services. However, they remain concerned about the company's
highly leveraged balance sheet and exposure to foreign exchange
First Quarter Highlights
On a GAAP basis, quarterly net income was $221.3 million or 56
cents per share, compared with $91.8 million or 23 cents per share
in the year-ago quarter. Adjusted EPS of 56 cents were
significantly ahead of the Zacks Consensus Estimate of 40
Quarterly total revenue of $696.5 million was up 23.8% year over
year, surpassing the Zacks Consensus Estimate of $671 million.
Adjusted EBITDA margin was 66% compared with 67% in the prior-year
Agreement of Analysts
Of the 16 analysts covering the stock in the last 7 days, one
analyst has revised the estimate upwards while two have revised
their estimates downward for the second quarter of 2012. For the
third quarter of 2012, out of the 16 analysts covering the stock,
none have revised upwards while three analysts have revised their
For fiscal 2012, out of the18 analysts covering the stock in the
last 7 days, three analysts have revised their estimates upward
while none have revised downwards. For fiscal 2013 out of the 18
analysts covering the stock, three analysts have revised their
estimates upward while none have revised downwards.
Currently, the Zacks Consensus Estimate for the second quarter
of fiscal 2012 is 42 cents, with a projected annual growth of
43.53%. For the third quarter of fiscal 2012, the Zacks Consensus
Estimate of 43 cents indicates an annual gain of 1,173.44%.
Magnitude of Estimate Revisions
As a result of the analysts' reluctance to revise estimates
either way over the past 7 days, the Zacks Consensus Estimate for
the second and third quarter of 2012 has remained static at 42 and
43 cents respectively. However, the current Zacks Consensus
Estimate for fiscal 2012 exceeds the prior estimate by a penny.
Whereas the estimate for fiscal 2013 remains in line with the Zacks
The company has outdone the Zacks Consensus estimates in three
out of the four previous quarters. In the first quarter of 2012,
American Tower outpaced the estimate by 16 cents or 40.00%.
The estimate for the ongoing quarter of fiscal 2012 contains a
downside risk (essentially a proxy for future earnings surprises)
of 2.38%, while the estimate for the third quarter of fiscal 2012
is in line with Zacks Consensus Estimate. The estimate for fiscal
2012 contains an upside potential of 5.09% while for fiscal 2013 it
contains an upside potential of 4.39%.
We believe that American Tower will benefit from strong demand
for wireless voice, data and video services which in turn will
propel the growth of the wireless tower industry. Deployment of 4G
WiMAX and LTE networks by carriers like
) coupled with increased adaptation of smartphones and tablets will
also create significant demand for tower leasing. Moreover, the
multi-level agreement (MLA) with
) is expected to act as a positive catalyst for the company.
Customer concentration is very high for American Tower which
indicates that losing a single customer could severely impact its
revenue. Expansion in emerging economies like India and Brazil
could boost the company's top-line but its bottom-line might be
impacted in the process due to the poor margin in these
Additionally, fierce competition from
Crown Castle International Corp.
) coupled with high operating expenses and a highly leveraged
balance sheet might act as a headwind for the company.
Considering these factors, we maintain our long-term Neutral
recommendation on American tower. Currently, American Tower has a
Zacks #2 Rank, implying a short-term buy rating on the stock.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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