On Sep 10, we maintained our Neutral recommendation on
Crown Castle International Inc.
), as both its top and bottom lines topped the Zacks Consensus
Estimate in the recently concluded quarter.
ADTRAN INC (ADTN): Free Stock Analysis Report
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
DOUGLAS EMMETT (DEI): Free Stock Analysis
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Why Maintained at Neutral?
Higher usage of smartphones and tablets and increased deployment
of 4G LTE networks have propelled demand for tower requirement by
large carriers. Moreover, the acquisition of NextG Networks Inc.
(which comprise 7,000 Distributed Antenna Systems) and the
purchase of 7,200 wireless towers from T-Mobile USA have made it
the largest wireless tower operator in the U.S.
As transporting equipment from one tower to another is
cumbersome, carriers normally renew contracts upon expiration.
This implies that a high percentage of Crown Castle's revenue is
Recently, the company decided to convert its tower business into
a Real Estate Investment Trust (REIT). An REIT status will
benefit the company in terms of tax savings and enhancing
long-term shareholders wealth. Moreover, it will also minimize
the weighted average cost of capital (WACC). Following the
conversion, Crown Castle will distribute 90% of its earnings
through dividends every year, reducing tax.
However, a highly leveraged balance sheet and the ongoing merger
deals between large telecom carriers may act as headwinds for the
company going forward. Moreover, Crown Castle is currently
trading at a 52-week high.
Crown Castle carries a Zacks Rank #3 (Hold).
Other Stocks Outlook in Related Industries
Other stocks in this sector like
American Tower Corporation
Douglas Emmett Inc.
) are set to gain from the robust growth of LTE deployment in the
Currently, Douglas Emmett has a Zacks Rank #2 (Buy) while both
American Tower Corporation and ADTRAN have a Zacks Rank #3