Technology

American Tower (AMT) Up 10.7% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for American Tower (AMT). Shares have added about 10.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American Tower due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

American Tower's Q4 AFFO Up Y/Y, Revenues Top Estimates

American Tower reported fourth-quarter 2018 consolidated adjusted FFO per share of $2.40, surpassing the Zacks Consensus Estimate of $2.30. The reported figure also surged 46.3% from the year-ago tally of $1.64.  

The company posted total revenues of $2.13 billion, beating the Zacks Consensus Estimate of $2.02 billion. The figure climbed 25.1% year over year.

Operating Metrics

Adjusted EBITDA in the reported quarter was $1,425 million, up 38.2% from the prior-year quarter. Adjusted EBITDA margin was 66.8% in the fourth quarter. Selling, general, administrative and development expenses totaled $192.5 million compared with $171.1 million incurred in the year-earlier quarter. Operating income was $388.9 million compared with $329 million reported in the year-ago quarter.

Cash Flow and Liquidity

In the fourth quarter of 2018, American Tower generated $1,263 million of cash from operations, up 59.1% year over year. Free cash flow in the Dec-end quarter was $953 million, up 74% year over year.

At the end of the reported quarter, the company had $1.2 billion in cash and cash equivalents compared with $802.1 million at the end of December 2017. Further, it had around $3.1 billion under its revolving credit facilities (net of any outstanding letters of credit).

Property Segment

Quarterly revenues grossed $2,103 million, up 25.3% year over year. Operating profit was $1,449 million and operating profit margin was 69% during the Oct-Dec period.

In the Property segment, revenues from the United States totaled $976 million, up 7% year over year. Total international revenues amounted to $1,127 million, up 47.2% year over year. Within this, revenues from Asia totaled $637 million, surging more than double year over year. EMEA revenues grossed $180 million, up 12% year over year. Latin America revenues totaled $311 million and inched up 0.8% year over year.

Services Segment

Quarterly revenues totaled $29 million, up 9.2% year over year. Operating profit was $17 million and operating profit margin was 60% in the quarter under review.

Outlook for 2019

For 2019, American Tower anticipates property revenues of $7,125-$7,295 million, reflecting decline of 1.4% at the mid-point. Net income is expected between $1,510 million and $1,620 million, marking growth of 23.7% at the mid-point. Adjusted EBITDA is projected at $4,415-$4,525 million, indicating a mid-point decline of 4.2%. Consolidated AFFO is estimated in the band of $3,370-$3,480 million, reflecting a mid-point contraction of 3.2%.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

At this time, American Tower has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

American Tower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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