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What's in Store for Crown Castle (CCI) this Earnings Season? - Analyst Blog

Zacks Equity Research
Updated

Crown Castle International Corp. (CCI) is slated to release its fourth-quarter 2014 results on Jan 21, 2015, after market close.

Last quarter, Crown Castle had delivered a positive earnings surprise of 7.41%. Notably, the company has delivered positive earnings surprises in two of the last four quarters, with an average miss of 2.17%. Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

Increased deployment of 4G LTE network along with higher usage of smartphones and tablets has propelled demand for tower requirement by large carriers. Crown Castle’s swiftly increasing tower network should therefore drive the company’s top and bottom line, going forward. Crown Castle is thus well positioned in the U.S. tower market to benefit from the growth potentials of the rapidly advancing wireless industry. The company has also raised its guidance for full year 2014 and expects Site Rental revenues in the range of $3,001– $3,006 million.

However, despite an extensive tower portfolio and accelerated 4G LTE network deployment, a highly leveraged balance sheet and the ongoing merger deals between large telecom carriers may act as headwinds for Crown Castle in the near term. To add to the woes, consolidation in the wireless industry may reduce demand for cell tower deployments and adversely affect the company’s top line. In addition, continuous change in technology, foreign currency exchange rate risks and higher customer concentration may dent Crown Castle’s profitability.

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, 2 or 3 for this to happen. Unfortunately, that is not the case here as elaborated below:

Zacks ESP: Crown Castle has an earnings ESP of +9.68%. This is because the Most Accurate estimate stands at 34 cents while the Zacks Consensus Estimate is pegged lower at 31 cents.

Zacks Rank: Crown Castle has a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 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 that you may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:

Ashford Hospitality Trust, Inc. (AHT) has an earnings ESP of +7.14% and a Zacks Rank #1 (Strong Buy).

Public Storage (PSA) has an earnings ESP of +0.46% and a Zacks Rank #1.

Chesapeake Lodging Trust (CHSP) has an earnings ESP of +4.35% and a Zacks Rank #2 (Buy).


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Zacks Investment Research