SBA Communications to Report Q2 Earnings: What to Expect?

Over the preceding four quarters, SBAC’s AFFO per share surpassed the Zacks Consensus Estimate on three occasions and missed in the remaining period, the average beat being 2.11%. The graph below depicts this surprising history:

SBAC: Factors at Play

In the second quarter, SBA Communications is likely to have benefited from steady carrier spending on network expansion and 5G deployments, supporting leasing activity through new colocations and site upgrades. Its long-term contracts with built-in escalators are likely to have ensured stable site-leasing revenues, while services tied to network construction may have added to growth.

However, SBAC’s performance may have been affected by customer concentration and tenant churn, potentially pressuring leasing activity and growth. Higher interest expenses and a leveraged balance sheet are likely to have been additional headwinds.

Q2 Projections for SBA Communications

The Zacks Consensus Estimate for second-quarter site-leasing revenues, which account for the lion’s share of total revenues, is pegged at $658 million, indicating an increase from the year-ago quarter’s $631.8 million.

Site-development revenues are expected to decrease in the second quarter. The consensus mark stands at $49.9 million, implying a fall from $67.2 million reported in the year-ago period.

The Zacks Consensus Estimate for total quarterly revenues is pegged at $703.4 million, calling for year-over-year growth of 0.6%.

The company’s activities in the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly AFFO per share has increased two cents to $2.96 over the past three months. However, the figure implies a year-over-year decline of 6.6%.

What Our Quantitative Model Predicts for SBAC

Our proven model does not conclusively predict a surprise in terms of AFFO per share for SBA Communications this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is not the case here.

SBA Communications currently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT industry — Host Hotels & Resorts HST and Lamar Advertising LAMR — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Host Hotels is slated to report quarterly numbers on Aug. 5. HST has an Earnings ESP of +1.73% and carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

LAMR, which is scheduled to report quarterly numbers on Aug. 6, has an Earnings ESP of +0.22% and a Zacks Rank of 3.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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