American Tower Hits New High - Analyst Blog

Shares of leading global wireless communication tower operator American Tower Corporation AMT touched a fresh 52-week high of $90.73 yesterday, before ending the session a little lower at $89.66. To date, the company reflects a solid return of nearly 13% this year.  

Higher adoption of smartphones/tablets coupled with increased deployment of 3G/4G networks by carriers across the world continues to drive demand for tower space. American Tower is rapidly expanding its business operations in various emerging markets.

In addition to Brazil and Mexico, American Tower has taken a major initiative to expand its operations in India. Moreover, the company has started offering cost-effective outdoor Distributed Antenna Systems (DAS) to its customers.

Recently, the company's board of directors approved a hike of 6.3% in the company's quarterly cash dividend to 34 cents per share of its common stock. It is worth noting that American Tower has consistently practiced dividend hikes over the last nine quarters.

American Tower's earnings have exceeded the Zacks Consensus Estimate in two out of the last four quarters, with an average earnings surprise of 4.2%. In the previously concluded quarter, the company reported strong financial numbers beating both the top and the bottom-line estimates.

Total revenue of $984.1 million increased 22.6% year over year and was also above the Zacks Consensus Estimate of $971 million. The company reported earnings per share of 51 cents beating the Zacks Consensus Estimate of 49 cents.

Furthermore, the Master Lease Agreement (MLA) for 9 years signed with Sprint Nextel Corp. S is expected to boost top-line growth going ahead. American Tower generates most of its revenues from such long-term (typically 5-10 years) tower leases with major wireless carriers.

American Tower also announced its plans to bid for Viom Networks – an Indian tower company with nearly 42,000 towers and more than 95,000 tenancies. This buyout will fortify American Tower's foothold in India as it already holds 10,000 towers in the nation. Moreover, India is undergoing a network upgrading phase, which should serve as an added advantage for American Tower.

American Tower currently has a Zacks Rank #3 (Hold).

Other Stocks to Consider

Some better-ranked stocks in this sector are Aviv REIT, Inc. AVIV, The GEO Group, Inc. GEO and Parkway Properties Inc. PKY. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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