Shares of SBA Communications SBAC have rallied 9.3% in the past three months, outperforming the industry's upside of 0.3%.
SBAC’s extensive and geographically diverse wireless communication infrastructure portfolio is well-positioned to gain from wireless carriers’ high capital spending for network expansion amid growth in mobile data usage and accelerated 5G network deployment efforts.
The long-term leases with its tenants assure stable revenues. Also, portfolio expansion moves, domestically and internationally, to capitalize on the secular trends of the industry are encouraging.
Analysts seem positive about this Zacks Rank #3 (Hold) company. The Zacks Consensus Estimate for its 2025 FFO per share has been revised marginally northward to $12.72 over the past two months.
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Factors Behind SBAC Stock Price Rise: Will This Trend Last?
The advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications have propelled growth in mobile data usage globally. Wireless service providers continue to lease additional antenna space on the company’s towers amid the increase in network use, data transfer, network expansion and network coverage requirements. As such, SBA Communications’ portfolio of extensive infrastructure assets is well-poised to capitalize on this upbeat trend.
SBA Communications has a resilient and stable site-leasing business model. The company generates most of its revenues from long-term (typically five to 10 years) tower leases that have built-in rent escalators. With high operating margins, its tower-leasing business remains attractive. The company also offers wireless service providers assistance in developing and maintaining their networks. Given the vast array of services the company offers due to its extensive site development experience, it is likely to propel its growth over the long term.
As the company continues to expand its tower portfolio and seek new growth opportunities, it focuses on business expansion into domestic and select international markets with high-growth characteristics. As of April 28, 2025, along with around Millicom’s 6,700 sites under contract for $925 million in cash, SBA Communications is under contract to buy 18 communication sites for a total consideration of $10 million in cash, which is expected to close by the end of the third quarter. Such portfolio expansion efforts will position SBA Communications to leverage secular trends in mobile data usage and wireless spending growth worldwide.
SBA Communications’ dividend hikes and share buybacks demonstrate its commitment to driving shareholder value and superior capital-distribution ability. The company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 19.97%. Given SBA Communications’ solid operating platform, decent financial position and lower-than-industry dividend payout rate, the dividend distribution is expected to be sustainable over the long run.
Also, following the first quarter of 2025, SBA Communications repurchased 583,000 shares of its Class A common stock for an aggregate amount of $122.9 million under its $1 billion stock repurchase plan. Such efforts boost shareholders’ confidence in the stock.
Key Risks for SBAC
High customer concentration and the ongoing consolidation in the wireless industry are concerns for SBA Communications’ top-line growth. Elevated interest rates add to the company’s woes.
Stocks to Consider
Some better-ranked stocks from the REIT sector are VICI Properties VICI and W.P. Carey WPC,each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share is pegged at $2.35, up 3.98% year over year.
The Zacks Consensus Estimate for W.P. Carey’s2025 FFO per share stands at $4.88, up 3.83% year over year.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
