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What's in Store for SBA Communications' (SBAC) Q3 Earnings?

Zacks Equity Research
·3 min read

SBA Communications Corporation SBAC is scheduled to report third-quarter 2021 results on Nov 1, after market close. The company’s results are expected to reflect year-over-year growth in the quarterly revenues and funds from operations (FFO) per share.

This Boca Raton, FL-based communications tower REIT delivered a surprise of 1.9% in terms of adjusted FFO per share in the last reported quarter. Results highlighted robust operating performance in its site-leasing as well as development businesses. It also benefited from the addition of sites to its portfolio.

Over the preceding four quarters, SBA Communications topped the FFO per share estimate on all occasions, the average beat being 2.97%. The graph below depicts this surprise history:

SBA Communications Corporation Price and EPS Surprise

SBA Communications Corporation Price and EPS Surprise
SBA Communications Corporation Price and EPS Surprise

SBA Communications Corporation price-eps-surprise | SBA Communications Corporation Quote

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Let’s see how things have shaped up prior to this announcement.

Factors at Play

During the third quarter, tower REITs like SBA Communications, Crown Castle CCI and American Tower Corp. AMT are likely to have benefited from the secular growth trends in the wireless industry. As the data volume for the wireless and wired networks has been growing rapidly amid the widespread adoption of smartphones and applications, the network carriers continued to spend on network deployments, in a bid to harness spectrum abilities as well as improve and densify their cell sites and coverage.

The long-term (typically 5-15 year) tower lease agreements that have built-in rent escalators are anticipated to have contributed to the recurring site rentals during the September-end quarter. The consensus estimate for third-quarter site-leasing revenues, which account for the lion’s share of the total revenues, is pegged at $528 million, suggesting 7.5% year-over-year growth.

Further, acquisitions and developments during the prior quarters are likely to have expanded the asset base and aided revenue generation during the quarter in discussion. Subsequent to the second-quarter 2021 end, the company has purchased or agreed to purchase 1800 communication sites for $270 million.

The Zacks Consensus Estimate for the third-quarter site development revenues is pegged at $47.2 million. This calls for year-over-year growth of 90%.

The Zacks Consensus Estimate for the third-quarter total revenues is pegged at $577.5 million. This calls for year-over-year growth of 10.4%.

The company’s activities during the quarter were adequate to gain analyst confidence. The Zacks Consensus Estimate for the quarterly FFO per share has been revised marginally upward to $2.65 over the past two months. Also, it suggests year-over-year growth of 11.3%.

Here is what our quantitative model predicts:

We cannot conclusively predict that SBA Communications will beat the Zacks Consensus Estimate this time. This is because the company doesn't have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for SBA Communications is 0.00%.

Zacks Rank: It currently carries a Zacks Rank of 2 (Buy).

A Stock That Warrants a Look

Here is a stock from the REIT sector that you may want to consider, as our model shows that it has the right combination of elements to report a surprise this quarter:

Apple Hospitality REIT APLE, slated to release third-quarter earnings on Nov 4, has an Earnings ESP of +26.67% and sports a Zacks Rank of 1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Tower Corporation (AMT) : Free Stock Analysis Report

Crown Castle International Corporation (CCI) : Free Stock Analysis Report

SBA Communications Corporation (SBAC) : Free Stock Analysis Report

Apple Hospitality REIT, Inc. (APLE) : Free Stock Analysis Report

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Zacks Investment Research