Crown Castle International Corp. CCI, a leading wireless communication tower operator in the U.S., is scheduled to report fourth-quarter 2016 financial numbers on Jan 25, after market close.
Last quarter, the company posted a negative earnings surprise of 3.54%. However, the company’s earnings surpassed the Zacks Consensus Estimate in two of the past four quarters, with an average beat of 2.32%.
Also, shares of Crown Castle lags the Zacks classified ‘REIT-Equity Trust-Other’ industry’s loss over the past three months. The stock has declined 4.74% which is worse than the industry’s loss of 0.79% over the same time span.
Let’s see how things are shaping up for this announcement.
Factors at Play
We are impressed with Crown Castle’s efforts to reward its shareholders with quarterly cash dividends. CrownCastle paid a quarterly cash dividend of 95 cents per common share on Dec 30, 2016 to common stockholders of records at the close of business of Dec 16, 2016.
Crown Castle’s extensive tower portfolio, increased demand for infrastructure, strong business outlook, healthy leasing activity, continued acquisition of towers and growing demand for mobile broadband are major positives. Wireless services are rapidly gaining ground courtesy of additional features and capabilities. Buyout of wireless towers also bodes well. Much of the infrastructure and upgrades require effective site management of cell towers and equipment. Crown Castle effectively addresses this opportunity as over 90% of its quarterly revenues come from wireless service providers like Verizon Communications Inc. VZ, AT&T Inc. T and T-Mobile US Inc. TMUS. We expect the upcoming results to enjoy the benefits of the same.
However, the company’s operation in a consolidated wireless industry has reduced demand for cell tower deployment and is therefore expected to dent Crown Castle’s top line considerably. Further, new technologies have reduced demand for site leases. Also, owing to its expansive international presence, Crown Castle remains exposed to foreign currency exchange rate risks. High customer concentration is also a concern for the company.
Our proven model does not conclusively show that Crown Castle is likely to beat on earnings 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. That is not the case here, as you will see below.
Zacks ESP: CrownCastle has an Earnings ESP of -2.70%. This is because the Most Accurate estimate stands at $1.08 while the Zacks Consensus Estimate is pegged at $1.11. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Crown Castle’s Zacks Rank #1 increases the predictive power of ESP, we need to have a positive ESP to be confident of an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
A Key Pick
Here is a company that has the right combination of elements to post an earnings beat this quarter.
BlackBerry Limited BBRY, with an Earnings ESP of +50.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
BlackBerry’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 62.50%.
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Crown Castle International Corp. (CCI): Free Stock Analysis Report
AT&T Inc. (T): Free Stock Analysis Report
Verizon Communications Inc. (VZ): Free Stock Analysis Report
T-Mobile US Inc. (TMUS): Free Stock Analysis Report
BlackBerry Ltd. (BBRY): Free Stock Analysis Report
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