More than a month has gone by since the last earnings report for Crown Castle International Corporation CCI. Shares have added about 9% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Crown Castle Lags Q3 Earnings &Revenues Estimates

Net Income

Crown Castle reported quarterly earnings per share of 34 cents lagging the Zacks Consensus Estimate of $1.17. GAAP net income (loss) came at $115.2 million, up 17% year over year.

Revenues

Total revenues in the third quarter increased 7.2% year over year to $1,063.24 million as against the Zacks Consensus Estimate of $1,067.6 million. Site Rental Segment quarterly revenues were $892.76 million, up 10% year over year. Network Services Segment quarterly revenues were $170.48 million, down 5.3% year over year.

Operating Metrics

Quarterly operating income came in at $260.6 million compared with $244.3 in the year-ago quarter. Total operating expenses rose to $802.7 million from $747.8 million in the year-ago quarter. Quarterly adjusted EBITDA was approximately $604.8 million, representing a year-over-year increase of 7.2%.

Cash Flow

As of Sep 30, 2017, Crown Castle generated $1,417.3 million of cash from operating activities compared with $1,304.7 million in the year-ago period.

Balance Sheet

At the end of third quarter of 2017, Crown Castle had cash and cash equivalents of approximately $6,719.13 million on its balance sheet compared with $567.6 million at the end of December 2016. At the end of the third quarter of 2017, debt and other long-term obligations totaled approximately $15,090.22 million, up from $12,069.39 million at the end of 2016. 

Dividend Hike

Crown Castle’s board of directors declared a quarterly cash dividend of $1.05 per common share, representing an increase of approximately 11% over the prior-quarter figure of 95 cents per share. The quarterly dividend will be paid on Dec 29, 2017 to common stockholders of record at the closure of business on Dec 15, 2017. Future dividends are subject to the approval of Crown Castle’s management.

Fourth-Quarter 2017 Outlook

For the fourth quarter of 2017, Crown Castle expects Site Rental revenues in the range of $904-$999 million. Site Rental cost of operation is projected in the band of $281-$286 million. Adjusted EBITDA is anticipated between $624 million and $629 million. Interest expense (inclusive of amortization) is estimated to be $159-$164 million. Meanwhile, FFO (funds flow from operation) is anticipated in the $376-$381 million band. AFFO (adjusted FFO) is projected in the $430-$435 million range, while net income is projected in the range of $91-$116 million.

Full-Year 2017 Outlook

Crown Castle has raised its 2017 outlook. The company expects Site Rental revenues in the range of $3,522-$3,527 million. Site Rental cost of operation is projected in the $1,096-$1,101 million band. Adjusted EBITDA is anticipated between $2,399 million and $2,404 million. Interest expense (inclusive of amortization) is estimated in the $590-$595 million range. FFO is expected around $1,590-$1,595 million. AFFO is expected around $1,779-$1,784 million. Net income is anticipated in the $438-$463 million range.

Full-Year 2018 Outlook

For the full-year 2018, the company expects Site Rental revenues in the range of $4,546-$4,591 million. Site Rental cost of operation is projected in the $1,360-$1,405 million band. Adjusted EBITDA is anticipated between $3,013 million and $3,058 million. Interest expense (inclusive of amortization) is estimated in the $644-$689 million range. FFO is expected to be around $1,910-$1,955 million. AFFO is expected between $2,219 million and $2,264 million. Net income is anticipated between $515 million and $595 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted downward by 12.2% due to these changes.

VGM Scores

At this time, Crown Castle’s stock has a subpar Growth Score of D, though it is doing slightly better on the momentum front with C. The stock was allocated also a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren’t focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is suitable solely for momentum investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.

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