News

American Tower Corporation AMT is scheduled to release first-quarter 2024 results on Apr 30, before the opening bell. The quarterly results are expected to reflect year-over-year growth in revenues and funds from operations (FFO) per share.

In the last quarter, American Tower reported an adjusted FFO per share of $2.29, beating the consensus mark by 5.05%. The quarterly results reflected better-than-anticipated revenues, aided by revenue growth across its Property segment.

Over the preceding four quarters, the company topped adjusted FFO per share estimates on all occasions, the average beat being 6.45%. The graph below depicts this surprise history:

American Tower Corporation Price and EPS Surprise

Factors to Note

During the first quarter, American Tower is likely to have benefited from the secular growth trends of the wireless industry. With the advancement in mobile technology, such as the 4G and 5G networks, and the proliferation of bandwidth-intensive applications, mobile data usage has increased significantly globally. Also, rampant usage of network-intensive applications for video conferencing and cloud services, and hybrid-working scenarios have accelerated the rise.

As a result, wireless service providers and carriers are deploying additional equipment for existing networks to boost their network coverage and capacity to meet the rising consumer demand. This positive trend is likely to have spurred the demand for AMT’s extensive and geographically diversified communication real estate portfolio, benefiting its quarterly performance.

The company’s long-term (typically 5-10 year) tower leases with major wireless carriers with multiple renewal period options are expected to have aided stable revenue generation, boosting the top line.

American Tower is anticipated to have carried on with its macro-tower investments during the quarter, backed by a robust balance sheet position.

The Zacks Consensus Estimate for quarterly revenues is pegged at $2.80 billion, indicating a rise of 1.28% from the year-ago period’s reported figure.

The consensus estimate for operating revenues from the Property segment is pegged at $2.76 billion, indicating growth from $2.72 billion reported in the year-ago period.

With the growth in cloud computing, the Internet of Things and Big Data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are experiencing a booming market. The consensus mark for operating revenues from the Data Centers is currently pegged at $220.2 million, up from $203 million in the year-ago period.

American Tower’s activities during the soon-to-be-reported quarter were adequate to gain analysts’ confidence. The Zacks Consensus Estimate for quarterly AFFO per share has moved up 1.2% to $2.55 over the past month. The figure also suggests an increase of 0.39% from the year-ago quarter’s reported figure.

However, operating revenues from the Services segment are expected to be on the lower side in the to-be-reported quarter. The Zacks Consensus Estimate stands at $26.3 million, suggesting a fall from $53 million reported in the prior-year quarter.

Additionally, higher interest expenses are likely to have impaired AMT’s performance to some extent during the quarter. Also, elevated churn in certain markets where the company operates may have been a spoilsport.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict a surprise in terms of FFO per share for American Tower this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an FFO beat. However, that’s not the case here.

American Tower has an Earnings ESP of -0.78% and currently carries a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Park Hotels & Resorts PK and Public Storage PSA — you may want to consider as our model shows that these have the right combination of elements to report a surprise this quarter.

Park Hotels, scheduled to report quarterly numbers on Apr 30, has an Earnings ESP of +3.66% and carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Public Storage is slated to report quarterly numbers on Apr 30. PSA has an Earnings ESP of +0.50% and carries a Zacks Rank of 3 presently.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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