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Crown Castle International Down 18% - Buy, Sell, Or Hold?

Crown Castle International (CCI) reported solid top and bottom-line growth in its most recent quarter. Moreover, the company is expected to benefit from its nationwide 5G deployment and diversified infrastructure offerings. However, amid the elevated market volatility, the stock has plunged nearly 18% year-to-date. So, should you Buy, Sell, or Hold the stock now? Read more to find out…

With a $24.28 billion market cap., Crown Castle International Corp. (CCI) owns, operates, and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every major market in the United States. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology, and wireless service.

CCI reported impressive fiscal 2022 first-quarter results and asserted immense growth ahead as it enables nationwide 5G deployment and diversifies its infrastructure offerings. The company has increased its full-year fiscal 2022 outlook. CCI now expects full-year site rental revenues to come in at $6.27 billion, compared to its prior forecast of $6.23 billion.

The company's income from continuing operations is expected to come in at $1.71 billion, up from the previously guided value of $1.67 billion. And its income from continuing operations per share is forecasted to be $3.94, compared to its previous outlook of $3.85. Furthermore, CCI expects an adjusted EBITDA of $4.33 billion, up from its prior outlook of $4.27 billion.

"We are seeing the benefit of a robust 5G leasing environment that contributed to the 9% AFFO per share growth we delivered in the first quarter and led to an increase in our operating expectations for the full year 2022," said Jay Brown, CCI's CEO.

"We believe our comprehensive offering of 40,000 towers, 115,000 small cells on-air or under contract, and 80,000 route miles of fiber provides shareholders with the largest exposure to the development of next-generation wireless networks in the best market to own shared network infrastructure. We expect the deployment of 5G in the U.S. to extend our opportunity to create long-term value for our shareholders," he added.

However, CCI's shares have declined 17.8% year-to-date and 12.9% over the past year to close the last trading session at $171.53. It is currently trading 18.3% below its 52-week high of $209.87, which it hit on December 31, 2021. The recent market volatility has contributed to the stock's sharp decline.

Here is what could influence the performance of CCI in the upcoming months:

Robust Financials

CCI's site rental revenues increased 15.1% year-over-year to $1.58 billion in the fiscal 2022 first quarter, which ended March 31, 2022. The company's adjusted EBITDA amounted to $1.10 billion, up 22.1% year-over-year. Its AFFO grew 10% year-over-year to $812 million, while its AFFO per share rose 9.4% from the year-ago value to $1.87.

Furthermore, the company's income from continuing operations and income from continuing operations per share came in at $421 million and $0.97, registering increases of 247.9% and 246.4%, respectively, from the prior-year period.

Favorable Analyst Estimates

Analysts expect CCI's revenue for the fiscal year 2022 (ending December 2022) to come in at $6.94 billion, representing a rise of 9.4% from the prior year. The $3.95 consensus EPS estimate for the ongoing year indicates a 56.1% year-over-year increase.

Also, Street expects the company's EPS to grow 13% per annum over the next five years. The company has an impressive earnings history as it has surpassed the consensus EPS estimates in each of the trailing four quarters.

High Profitability

CCI's trailing-12-months EBIT margin of 33.41% is 45.2% higher than the 23.01% industry average. Its trailing-12-months EBITDA margin of 57.69% is 5.7% higher than the 54.57% industry average. Likewise, the company's trailing-12-months net income of 22.12% is 16.9% higher than the industry average of 18.91%.

Furthermore, CCI's trailing-12-months ROCE and ROTA of 17.19% and 3.74% are higher than the industry averages of 5.05% and 2.56%, respectively.

POWR Ratings Show Promise

CCI's overall B rating equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

CCI has a B grade for Growth and Sentiment, consistent with its robust financial performance in the last reported quarter and favorable revenue and earnings growth estimates.

CCI is ranked #10 out of 51 stocks in the REITs - Diversified industry.

Beyond what I have stated above, we have also given CCI grades for Quality, Momentum, Value, and Stability. Get access to all the CCI ratings here.

Bottom Line

CCI reported solid fiscal 2022 first-quarter results and asserted continued growth for full-year 2022. And the company is well-positioned to benefit from its diversified infrastructure offerings and 5G deployment across the country.

Given the company's robust financials, higher-than-industry profitability, and solid revenue and earnings growth estimates, I think it could be wise to buy the stock now.

How Does Crown Castle International Corp. (CCI) Stack Up Against its Peers?

CCI has an overall POWR Rating of B. One could also check out these other stocks within the REITs - Diversified industry: Alliance Global Group, Inc. (ALGGY) with an A (Strong Buy) rating and Land Securities Group PLC (LDSCY), and Lamar Advertising Co. (LAMR) with a B (Buy) rating.

CCI shares were trading at $172.94 per share on Wednesday afternoon, up $1.41 (+0.82%). Year-to-date, CCI has declined -15.70%, versus a -19.07% rise in the benchmark S&P 500 index during the same period.

About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.


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