On May 9, 2014, we issued an updated research report on
Crown Castle International
Crown Castle has delivered positive earnings surprises in two of
the last four quarters last year, with an average beat of 11.7%.
The company reported mixed financial results for the first quarter
of fiscal 2014 with the bottom line missing the Zacks Consensus
Estimate but the top line surpassing the same.
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 comprises 7,000 Distributed Antenna Systems) and the
purchase of 7,200 wireless towers from T-Mobile USA have positioned
Crown Castle as the largest wireless tower operator in the U.S.
Furthermore, the company has entered into a definitive agreement
with telecom giant
) to acquire exclusive rights to 9,700 wireless towers of the
latter for a total consideration of $4.85 billion
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 recurring.
In Jan, 2014, the company started operating as a Real Estate
Investment Trust (REIT). An REIT status will benefit the company in
terms of tax savings and will also enhance long-term shareholders
wealth. Furthermore, operating as an REIT will minimize the
weighted average cost of capital. Following the conversion, Crown
Castle will distribute 90% of its earnings through dividends every
year, reducing tax.
On the flip side, a highly leveraged balance sheet and the ongoing
merger deals between large telecom carriers may act as headwinds
for the company going forward. Moreover, the stock is overvalued at
current levels. Meanwhile, for the last one year, the stock price
of Crown Castle has been trading at the high-end of its 52-week
Crown Castle currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Other stocks in this sector include
CommScope Holding Company, Inc.
Juniper Networks, Inc.
). CommScope has a Zacks Rank #1 (Strong Buy) while Juniper
Networks and Nokia carry a Zacks Rank #2 (Buy).
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CROWN CASTLE (CCI): Free Stock Analysis Report
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