Will Leasing Support SBA Communications' (SBAC) Q4 Earnings?
Zacks Investment Research | Feb 18, 2019 08:39PM ET
SBA Communications Corporation (NASDAQ:SBAC) is scheduled to report fourth-quarter 2018 financial results after the closing bell on Feb 21. In the last reported quarter, the company delivered a positive earnings surprise of 2.7%. Notably, SBA Communications surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 14.9%.
The communications tower operator is likely to report higher year-over-year revenues in both the operating segments on the back of solid domestic site leasing business, excellent services and cost control initiatives. Whether this can result into an earnings beat remains to be seen.
Let’s find out how things are shaping up prior to the announcement.
Factors at Play
SBA Communications is poised to benefit from strong customer activity both domestically and internationally, coupled with healthy backlogs with each of its big four U.S. customers. The company expects the positive momentum, backed by investment by these customers in their networks, to have resulted in new leases and amendment signings in the quarter.
The Zacks Consensus Estimate for revenues from Site Leasing business, which accounts for the lion’s share of total revenues, is pegged at $443 million, up from $414 million reported in fourth-quarter 2017. Revenues from Site Development business are expected to be $30.2 million compared with $29 million reported in the prior-year quarter. For the fourth quarter, the consensus estimate for total revenues stands at $472 million. The company reported $443 million in the year-earlier quarter. Adjusted funds from operations (AFFO) per share is pegged at $1.92. The company reported earnings of 23 cents in the prior-year quarter.
Operating profit from Site Leasing is expected to increase to $349 million from $324 million reported in the year-earlier quarter, while the same from Site Development is likely to improve to $6.7 million from $4.9 million.
SBA Communications believes that the synergies of robust customer demand, operational efficiency and strategic capital allocation will help it to enhance shareholder value by growth in AFFO. However, the company remains susceptible to earnings volatility due to unfavorable foreign currency movements on account of its geographically diverse scale of operations.
What Our Model Says
Our proven model does not conclusively show that SBA Communications is likely to beat earnings this quarter as it does not possess one of the two key components. A stock needs to have both a positive Zacks Investment Research
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