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Crown Castle (CCI) Up 10.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Crown Castle (CCI). Shares have added about 10.2% in that time frame, outperforming the S&P 500.

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

Crown Castle's Q1 AFFO & Revenues Surpass Estimates

Crown Castle reported first-quarter 2024 AFFO per share of $1.72, outpacing the Zacks Consensus Estimate by a penny. Results reflected better-than-anticipated revenues, with the company reporting net revenues of $1.64 billion, beating the Zacks Consensus Estimate of $1.63 billion.

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However, on a year-over-year basis, AFFO per share declined 9.9% while revenues fell 7.4%.

High interest expense on debt obligations and lower contributions from adjusted EBITDA were undermining factors. Crown Castle also maintained its outlook for 2024.

Quarter in Detail

During the first quarter, Crown Castle’s site-rental revenues came in at $1.59 billion, down 2.2% from the prior-year quarter. The organic contribution of $17 million to the site rental billings reflected 1.2% growth and was not materially impacted by the Sprint Cancellations. Our estimate for site-rental revenues was pegged at $1.56 billion.

On the other hand, services and other revenues plunged 64.4% year over year to $53 million.

Crown Castle’s quarterly operating expenses decreased 3.7% year over year to $1.1 billion. The operating income fell to $538 million from $628 million recorded a year ago. The quarterly adjusted EBITDA of $1.04 billion slipped 6.2%. We estimated the metric to be $1.08 billion.

Interest expense on debt obligations rose 12.6% year over year to $223 million.

The company reported capital expenditures of $320 million in the quarter. This comprised discretionary capital expenditures of $298 million and sustaining capital expenditures of $22 million. Discretionary capital expenditures primarily attributable to Fiber were around $259 million, and those to Towers were roughly $33 million.

Balance Sheet

Crown Castle exited the first quarter of 2024 with cash and cash equivalents of $125 million, up from $105 million reported as of Dec 31, 2023.

Moreover, debt and other long-term obligations aggregated $22.56 billion as of Mar 31, 2024, increasing 2.1% sequentially.

2024 Guidance

Crown Castle maintained its guidance for 2024 AFFO per share in the range of $6.85-$6.97.

Site rental revenues are expected to be between $6.347 billion and $6.392 billion, while the adjusted EBITDA is estimated to be in the band of $4.138-$4.188 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Crown Castle has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated 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.

Outlook

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

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