Is American Tower (AMT) Poised to Beat Earnings Estimates? - Analyst Blog

American Tower Corporation AMT, a leading global wireless communications tower operator, is scheduled to report its first-quarter 2014 financial numbers before the opening bell on May 1, 2014.

In the prior quarter, the company's earnings missed the Zacks Consensus Estimate by 45.65%. Let's see how things are shaping up for this announcement.

Factors to Influence This Quarter

Increased deployment of 3G/4G networks, aggressive buyouts of towers in emerging markets and significant margin improvement will continue to act as catalysts for American Tower.

Growth in mobile subscribers has significantly boosted the wireless tower industry. Moreover, the company's future financials are likely to be propelled by strong demand for wireless voice, broadband wireless data and video networks, which require more tower space. The deployment of 3G mobile networks necessitates the expansion of coverage and infrastructure by carriers. Next-generation 4G LTE networks coupled with increased usage of smartphones and tablets are also likely to create substantial demand for tower leasing.

However, foreign currency exchange rate risk, stiff competition, integration risk, rising operating expenses and a highly leveraged balance sheet may act as headwinds for the company while moving ahead.

Earnings Whispers

Our proven model does not conclusively show that American Tower 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, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP represent the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -2.04% for American Tower as the Most Accurate estimate stands at $0.48 while the Zacks Consensus Estimate is higher at $0.49.

Zacks Rank: American Tower's Zacks Rank #3 (Hold) increases the predictive power of ESP, but when combined with a negative ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

The GEO Group, Inc. GEO with Earnings ESP of +12.07% and Zacks Rank #1 (Strong Buy).

Strategic Hotels & Resorts, Inc. BEE with Earnings ESP of +83.33% and Zacks Rank #2 (Buy).

Aviv REIT, Inc. AVIV with Earnings ESP of +11.91% and Zacks Rank #3 (Hold).