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Will Crown Castle International (CCI) Pull a Surprise with Q3 Earnings?

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Crown Castle International Corp.CCI is slated to release its third-quarter 2015 results on Oct 21, after market close.

In the last reported quarter, the company's earnings had missed the Zacks Consensus Estimate by 10.00%. Moreover, the company has delivered negative earnings surprises in two of the prior four quarters, with an average miss of 6.70%. Let's see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

CrownCastle has long-term (typically 5-10 year) tower lease agreements with the top four U.S. carriers, which contribute nearly 88% of its revenues. Thus, these agreements make management confident of producing nearly $22 billion in revenues over the next eight years. In addition, Crown Castle operates in 100 popular U.S. markets, with over 40,000 towers and roughly 14,000 small-cell nodes supported by around 7,000 miles of fiber backhaul.

The company has also raised its financial outlook for full-year 2015. An extensive tower portfolio, a strong business outlook, continuous acquisition of towers and accelerated 4G LTE network deployment are factors that are likely to impact the third quarter favorably. Furthermore, Crown Castle is focusing on owning the land beneath its towers and the ground leases for a longer term, which should help deliver increased margins, going forward.

Evolution of new technologies may reduce the demand for site leases, hurting Crown Castle's prospects. Further, the recent development of satellite-delivered radio and video services and frequent changes in demand for network services and infrastructure support will tend to increase volatility in the company's revenues.

Earnings Whispers

Our proven model does not conclusively show that Crown Castle is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below:

Zacks ESP: Crown Castle has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and Zacks Consensus Estimate is pegged at $1.04.

Zacks Rank: Crown Castle has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

Note that, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:

Equity Commonwealth EQC has an earnings ESP of +10.53% and a Zacks Rank #2.

Communications Sales & Leasing, Inc. CSAL has an earnings ESP of +28.57% and a Zacks Rank #2.

BioMed Realty Trust Inc. BMR has an earnings ESP of +7.69% and a Zacks Rank #2.

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CROWN CASTLE (CCI): Free Stock Analysis Report

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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.


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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