Better Buy: Crown Castle International vs. American Tower

NYSE: CCI | Crown Castle International Corp. News, Ratings, and Charts

CCI – Since growing concerns over Fed’s aggressive interest rate hikes to control multi-decade high inflation could keep the overall stock market highly volatile in the near term, REITs Crown Castle (CCI) and American Tower (AMT) should provide a steady income stream. But which of these two stocks is a better buy now? Read more to find out.

Crown Castle International Corp. (CCI) owns, operates, and leases over 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every primary U.S. market. On the other hand, American Tower Corporation (AMT) is one of the largest global REITs, which is a leading independent owner, operator, and developer of multitenant communications real estate with a portfolio of approximately 219,000 communications sites.

The economy has been under severe inflationary stress, with the Consumer Price Index rising to 8.6% in May, the fastest advance in more than 40 years. The Federal Reserve recently raised interest rates by 0.75%, the most significant move in a single meeting since 1994. Moreover, the stock market is expected to remain under pressure as the Fed leans on higher borrowing costs to dampen demand and slow faster-than-expected inflation through further interest rate hikes this year. Amid this environment, investors could turn toward REIT stocks to hedge their portfolios against short-term market volatility by ensuring a steady income stream. Consequently, we think both CCI and AMT might rally.

AMT has gained 2.2% over the past three months, while CCI has negative returns. Also, AMT’s 3.8% gains over the past month compared to CCI’s negative returns.

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On May 10, 2022, CCI announced that its Board of Directors had declared a quarterly cash dividend of $1.47 per common share. The quarterly dividend will be payable on June 30, 2022, to common stockholders of record at the close of business on June 15, 2022.

On May 19, 2022, AMT announced that its board of directors had declared its quarterly cash distribution of $1.43 per share on shares of its common stock. The distribution is payable on July 8, 2022, to the stockholders of record at the close of business on June 17, 2022.

Recent Financial Results

CCI’s site rental revenues increased 15% year-over-year to $1.58 billion for the fiscal first quarter ended March 31, 2022. The company’s adjusted EBITDA grew 22% year-over-year to $1.10 billion, while its income from continuing operations came in at $421 million, representing a 248% year-over-year increase. Also, its income from continuing operations per share came in at $0.97, up 246% year-over-year.

AMT’s revenue increased 23.2% year-over-year to $2.66 billion for the fiscal first quarter ended March 31, 2022. The company’s adjusted EBITDA grew 12.8% year-over-year to $1.62 billion, while its net income came in at $703 million representing a 7.7% year-over-year increase. Also, its EPS came in at $1.56, up 7.6% year-over-year.

Past and Expected Financial Performance

CCI’s EBIT and EPS grew at CAGRs of 14.9% and 33.3%, respectively, over the past three years. Analysts expect CCI’s revenue to increase 9.5% for the quarter ending June 30, 2022, and 9.4% in fiscal 2022. The company’s EPS is expected to grow 24.7% for the quarter ending June 30, 2022, and 56.1% in fiscal 2022. Moreover, its EPS is expected to grow at a rate of 13% per annum over the next five years.

On the other hand, AMT’s EBIT and EPS grew at CAGRs of 6.7% and 24%, respectively, over the past three years. The company’s revenue is expected to increase 20.1% for the quarter ending June 30, 2022, and 14.1% in fiscal 2022. However, its EPS is expected to decline 41.8% for the quarter ending June 30, 2022, and 20.1% in fiscal 2022. Also, AMT’s EPS is expected to grow at a rate of 13.2% per annum over the next five years.

Profitability

AMT’s trailing-12-month revenue is 1.49 times what CCI generates. Moreover, AMT is more profitable, with a gross profit margin and net income margin of 70.51% and 26.72%, compared to CCI’s 69.08% and 22.12%, respectively.

Furthermore, AMT’s ROE, ROA, and ROTC of 37.94%, 3.67%, and 4.17% are higher than CCI’s 17.19%, 3.54%, and 3.90%, respectively.

Valuation

In terms of forward non-GAAP P/E, AMT is currently trading at 54.44x, 34.6% higher than CCI’s 40.45x. Moreover, AMT’s forward EV/EBITDA ratio of 24.72x is 12% higher than CCI’s 22.07x.

So, CCI is relatively affordable here.

POWR Ratings

CCI has a B overall rating, equating to a Buy in our proprietary POWR Ratings system. On the other hand, AMT has an overall rating of C, which translates to Neutral. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

CCI has a B grade for Growth, consistent with analysts’ expectations that its EPS will increase in the upcoming months. On the other hand, AMT has a D grade for Growth, in sync with analysts’ expectations that its EPS will decline in the near term.

Of the 50 stocks in the REITs – Diversified industry, CCI is ranked #12, while AMT is ranked #32.

Beyond what I’ve stated above, we have also rated the stocks for Quality, Momentum, Value, Stability, and Sentiment. Click here to view all the CCI ratings. Also, get all the AMT ratings here.

The Winner

As the stock market is expected to remain under pressure on concerns over the aggressive Fed rate increases and high inflation, REITs should witness increasing investor attention because of their high dividend yield. While both CCI and AMT are expected to gain, it is better to bet on CCI now because of its lower valuation and better growth prospects.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the REITs – Diversified industry here.


CCI shares were trading at $154.52 per share on Thursday afternoon, down $5.73 (-3.58%). Year-to-date, CCI has declined -24.68%, versus a -22.61% rise in the benchmark S&P 500 index during the same period.


About the Author: Nimesh Jaiswal


Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...


More Resources for the Stocks in this Article

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

Most Popular Stories on StockNews.com


Inflation Not Fading Fast Enough for Stock Investors

Investors may have celebrated the end of high inflation too soon. The CPI report shows inflation bouncing higher and thus pushing back the start date for Fed rate cuts. This has the S&P 500 (SPY) coming off recent highs. This begs questions like how much more downside could we see? And when will the bull market get back on track? 44 year investment veteran Steve Reitmeister shares his answers to these questions in this timely commentary including a preview of his top picks to stay ahead of the pack. Read on below for more...

3 Auto Stocks to Consider Over TSLA in April

Tesla (TSLA) reported a decline in deliveries in the first quarter, and Wall Street expects the company to deliver fewer vehicles than last year. Furthermore, rising competition, slowing EV sales, and stretched valuation make TSLA unattractive from an investment standpoint. Considering these factors, investors could consider buying fundamentally strong auto stocks Blue Bird (BLBD), Rolls-Royce Holdings (RYCEY), and Stellantis (STLA) over Tesla (TSLA). Read more...

3 Top-Rated Tech Stock Buys for Value in April

The technology sector is undergoing a notable surge, propelled by increasing digitalization endeavors among businesses and governmental support for technological progress. So, fundamentally sound tech stocks Box Inc. (BOX), Teradata (TDC), and Materialise (MTLS), which seem pretty undervalued, might be ideal buys this month. Continue reading...

Top Software Stocks at the Forefront of Market Gains

The software industry's prospects appear bright due to increasing investments in digital transformation, high demand for advanced software services from various sectors, and the integration of emerging technologies such as generative AI. Therefore, investors could consider buying quality software stocks Autodesk (ADSK), DocuSign (DOCU), and Pegasystems (PEGA) for solid gains. Read more...

Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

Read More Stories

More Crown Castle International Corp. (CCI) News View All

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