On May 28, 2014, we issued an updated research report on
American Tower Corp.
). Increased deployment of 3G/4G networks, aggressive buyouts of
towers in emerging markets, significant margin improvement and
higher dividend growth should continue to act as catalysts for the
company, in our view.
AmericanTower delivered positive earnings surprises in two of
the last four quarters, with an average beat of 4.23%.The company
reported lackluster first-quarter 2014 results, wherein both the
top and the bottom line missed the corresponding Zacks Consensus
Higher adoption of smartphones/tablets coupled with increased
deployment of 3G/4G networks by carriers across the world will
continue to drive demand for tower space. American Tower is rapidly
expanding its business operations in various emerging markets. In
addition to Brazil and Mexico, American Tower has taken a major
initiative to expand its operations in India. Moreover, the company
has started offering cost-effective outdoor Distributed Antenna
Systems (DAS) to its customers.
On the flipside, American Tower has a substantially
leveraged its balance sheet. At the end of the second quarter of
2013, the company had nearly $8.79 billion of net debt (total
debt-cash & cash equivalents) and the debt-to-capitalization
ratio stood at 0.71. High debt levels lower the company's ability
to generate sufficient cash to meet future debt obligations. This
may also hinder the company's efforts to access the debt market to
borrow and refinance at favorable rates.
Furthermore, high customer concentration coupled with
substantial exposure to foreign exchange rate risks are likely to
act as headwinds for AmericanTower, going forward.
Currently, AmericanTower has a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Other stocks in the wireless tower industry include
Aviv REIT, Inc. (
The GEO Group, Inc. (
Terreno Realty Corp. (
. All three have a Zacks Rank #1 (Strong Buy).
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AMER TOWER CORP (AMT): Free Stock Analysis
AVIV REIT INC (AVIV): Free Stock Analysis
GEO GRP INC/THE (GEO): Free Stock Analysis
TERRENO REALTY (TRNO): Free Stock Analysis
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