American Tower vs. Crown Castle: Which Telecommunications REIT is a Better Buy?

NYSE: AMT | American Tower Corporation (REIT)  News, Ratings, and Charts

AMT – The 5G revolution has just begun and is expected to transform the way society perceives, engages, and interacts with technology. So, it may be wise to bet on American Tower (AMT) and Crown Castle (CCI) because they are strategically positioned to gain from continued advancements in the telecommunications space that this revolution will surely yield. But let’s find out which of these two stocks is a better buy now.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

American Tower Corporation (AMT) and Crown Castle International Corp. (CCI) are two of the top players in the telecommunications real estate investment trust (REIT) space. AMT operates primarily through five segments — U.S. property, Asia property, EMEA property, Latin America property, Services and Other. CCI’s segments are towers and small cells.

As  AMT and CCI both own, operate and lease space on communications sites to wireless service providers, among others, they are expected to generate huge returns amid the burgeoning 5G boom.

While AMT has returned 52.9% over the past three years, CCI has gained 40.2%. In terms of past-year performance, CCI is a clear winner with 7.2% returns versus AMT’s negative values. But which of these two stocks is a better pick now? Let’s find out.

Latest Movements

AMT announced on December 23 that it has closed its acquisition of InSite Wireless Group, LLC. The company expects the assets acquired from acquisition  to generate roughly $150 million in property revenue and roughly $115 million in gross profits in 2021. Also in December, AMT declared its quarterly cash distribution of $1.21 per share payable on February 2, 2021.

The company has signed a new long-term agreement with T-Mobile US, Inc. (TMUS).The new agreement enhances TMUS’ access to AMT’s United States’ sites while locking in synergies and facilitating TMUS’ continued rapid, efficient deployment of broad and deep nationwide 5G. It is hoped the arrangement will drive significant value for both parties over its nearly 15-year term.

CCI announced a long-term agreement with DISH Network Corporation (DISH) on November 16, through which CCI will lease DISH space on up to 20,000 communication towers. CCI is the first infrastructure partnership in which  DISH has embarked. In the words of Jay Brown, CCI CEO, “We are excited to establish this long-term strategic relationship with DISH, and we look forward to supporting their nationwide 5G network deployment for years to come.”

In  November, the company appointed Chris Levendos to lead CCI’s small cells and fiber solutions activities as Executive Vice President and Chief Operating Officer – Fiber. CCI announced a quarterly cash dividend of $1.33 per common share on October 22, which was paid on December 31.

Recent Financial Results

AMT’s revenue surged 5% sequentially to $2 billion for the third quarter ended September 30, 2020. Its property revenues increased 5% sequentially and services revenue increased 27.8% sequentially to $25.3 million. Operating income increased 7.8% year-over-year to $785.1 million. And net income increased 3.2% sequentially to $462.9 million, yielding EPS of $1.04, which increased 4% sequentially.

CCI’s revenue for the third quarter ended September 30, 2020 increased 3.2% sequentially to $1.5 billion. Its site rental revenue increased 4% year-over-year to $1.3 billion, and services and other revenue increased 21.5% sequentially. Operating income increased 13.3% sequentially to $434 million.

So, AMT is in an advantageous position here.

Past and Expected Financial Performance

AMT’s revenue and EPS have grown  at a CAGR of 6.5% and 17.2%, respectively, over the past three years. The  company’s EBITDA grew at a CAGR of 8.2% over the same period.

Analysts expect AMT’s revenue to increase 7% for the quarter ended December 31, 2020, 6.9% for the quarter ending March 31, 2021, and 7.5% in 2021. The company’s EPS is expected to grow 48.4% for the quarter ending March 31, 2021, and 23.8% in 2021. Moreover, its EPS is expected to grow at a rate of 15.9% per annum over the next five years.

In comparison,  CCI’s revenue and EPS have grown  at a CAGR of 11.6% and 10.3%, respectively, over the past three years. Also, the company’s EBITDA grew at a CAGR of 12.3% over the same period.

The market expects CCI’s revenue to increase 5.4% for the quarter ended December 31, 2020, 6.9% for the quarter ending March 31, 2021, and 5.7% in 2021. The company’s EPS is expected to grow 42.1% for the quarter ending March 31, 2021, and 31.2% in 2021. Moreover, CCI’s EPS is expected to grow at a rate of 17.5% per annum over the next five years.

Profitability

AMT’s trailing-12-month revenue is 1.36 times CCI’s. Moreover, AMT is more profitable with a gross margin of 71.9% versus CCI’s 66.6%.

Also, AMT’s ROE and ROA of 34.2% and 4.7%, respectively, compare favorably with CCI’s 7.3% and 2.6%.

Valuation

In terms of forward P/E, CCI is currently trading at 80.58x, 67.8% more expensive than AMT which is currently trading at 48.03x. Though CCI is less expensive in terms of trailing-12-month P/S (10.99x versus 12.15x), its forward PEG of 6.43x is 47.2% higher than AMT’s 4.24x.

In terms of trailing-12-month price/cash flow, AMT’s 25.50x is 12.4% higher than CCI’s 22.69x.

POWR Ratings

AMT and CCI are both rated “Neutral” in our proprietary POWR Ratings system. Here are how the four components of overall POWR Rating are graded for AMT and CCI:

AMT has a “C” for Trade Grade, and Buy & Hold Grade, and a “D” for Peer Grade, and Industry Rank. It is currently ranked #19 of 57 stocks in the REITs – Diversified industry.

CCI holds a “C” for Trade Grade, and Industry Rank, a “B” for Buy & Hold Grade, and a “D” for Peer Grade. It is currently ranked #22 of 50 stocks in the Real Estate Services industry.

The Winner

Both AMT and CCI are good investment bets considering their market dominance. However, AMT appears to be a better choice based on the factors discussed here. AMT’s superior financials and higher profitability should help it perform better than CCI.

Want More Great Investing Ideas?

“MUST OWN” Growth Stocks for 2021

Should Investors Beware January 6?

7 Best ETFs for the NEXT Bull Market

 


AMT shares were trading at $219.38 per share on Thursday afternoon, up $4.49 (+2.09%). Year-to-date, AMT has declined -2.26%, versus a 1.44% rise in the benchmark S&P 500 index during the same period.


About the Author: Manisha Chatterjee


Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
AMTGet RatingGet RatingGet Rating
CCIGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!


Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Is This ANOTHER Stock Market Bubble?

More and more experts are pointing to the stock market (SPY) being well above historical valuation levels. Then when you see the movement of stocks like Tesla its hard not to think of the tech bubble of 1999. So let’s review if this is indeed a bubble. And if so, then provide a game plan for how investors should ride it up and then parachute out before its too late. Read on below for more…

:  |  News, Ratings, and Charts

An ETF to Buy for the Autonomous Vehicle Revolution

A Biden administration should bolster the ongoing EV and autonomous vehicle trend through substantial capital inflows and tax subsidies. And, with this, as EV giants and start-ups outperform the broader market, the Global X Autonomous & Electric Vehicles ETF (DRIV) should, we think, provide optimal risk-return exposure.

:  |  News, Ratings, and Charts

4 Stocks Soaring Higher on Biden's Infrastructure Plan

U.S. President-elect Joe Biden's ambitious plans to address climate change through eco-friendly and sustainable infrastructure development is expected to be a key focus this year. As such, stocks like BHP (BHP), Caterpillar (CAT), Rio Tinto (RIO) and United States Steel (X) are soaring and should deliver stellar results in the near future. Let us look closer at these companies to see why.

:  |  News, Ratings, and Charts

The Stock of the Week is ???

Helen of Troy (HELE) is one of the most consistent growth companies around in the consumer goods space. Their earnings announcement last week reminded everyone that there is plenty of growth on hand and Wall Street is taking note. Read on for more...

:  |  News, Ratings, and Charts

4 Stocks Soaring Higher on Biden's Infrastructure Plan

U.S. President-elect Joe Biden's ambitious plans to address climate change through eco-friendly and sustainable infrastructure development is expected to be a key focus this year. As such, stocks like BHP (BHP), Caterpillar (CAT), Rio Tinto (RIO) and United States Steel (X) are soaring and should deliver stellar results in the near future. Let us look closer at these companies to see why.

Read More Stories

More American Tower Corporation (REIT) (AMT) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All AMT News