A month has gone by since the last earnings report for American Tower (AMT). Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is American Tower due for a breakout? 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.
American Tower’s Q3 AFFO Beats Estimates, '24 View Lowered
American Tower reported third-quarter 2024 adjusted funds from operations (AFFO) per share, attributable to common stockholders, of $2.64 which beat the Zacks Consensus Estimate of $2.54 and climbed 2.3% year over year.
American Tower recorded healthy year-over-year organic tenant billings growth of 5.2% and total tenant billings growth of 5.9%.
The company’s total revenues were $2.52 billion, missing the Zacks Consensus Estimate of $2.76 billion. However, the figure increased marginally from the prior-year quarter.
Quarter in Detail
Adjusted EBITDA was $1.69 billion, down 0.9% from the prior-year period. The adjusted EBITDA margin was 66.9% in the quarter.
The company, through its subsidiary, ATC Asia Pacific Pte. Ltd., has reached agreements to sell its entire ownership stake in its subsidiaries located in Australia (“ATC Australia”) and New Zealand (“ATC New Zealand”). The total expected consideration for this sale is $78.2 million as of the signing dates, subject to certain adjustments. The operating results of both ATC Australia and ATC New Zealand are included in the Asia-Pacific property segment. It should be noted that these divestitures will not be classified as discontinued operations.
Property Operations
Revenues were $2.47 billion, down 1% on a year-over-year basis. Total operating profit was $1.72 billion, and the operating profit margin was 70%.
In the Property segment, revenues from the United States and Canada totaled $1.32 billion, down marginally year over year. Total international revenues amounted to $918 million, declining 4.3%. Data Centers added $234 million to Property revenues, up 10.4% from the prior-year period.
Service Operations
Revenues totaled $52.4 million in the reported quarter, up from $26.2 million in the prior-year quarter. The operating profit was $22 million, and the operating profit margin was 43% in the July-September quarter.
Cash Flow & Liquidity
In the third quarter, American Tower generated $1.47 billion of cash from operating activities, rising 13% year over year. Free cash flow in the period was $1.04 billion, jumping 16.2% from a year ago.
As of Sept. 30, 2024, the company had $10.9 billion in total liquidity. This comprised $2.2 billion in cash and cash equivalents and availability of $8.8 billion under its revolving credit facilities (net of any outstanding letters of credit).
2024 Guidance Lowered
American Tower anticipates total property revenues of $9,890 -$9,980 million, down from the earlier guided range of $11,100 -$11,280 million.
The adjusted EBITDA is revised to $6,770-$6,850 million, down from the prior projected range of $7,250-$7,360 million.
The AFFO attributable to American Tower’s common stockholders is now expected to be in the band of $4,890-$4,970 million, down from the company’s prior expected range of $4,905-$5,015 million.
AFFO per share is revised downward to $10.45-$10.62 from the prior projected range of $10.48-$10.72.
It decreased the guidance for capital expenditure between $1,500-$1,610 million from the prior guided range of $1,600-$1,710 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, American Tower has an average Growth Score of C, a grade with the same score on the momentum front. 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 D. 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 this revision indicates a downward shift. Notably, American Tower has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
American Tower belongs to the Zacks REIT and Equity Trust - Other industry. Another stock from the same industry, Prologis (PLD), has gained 1.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Prologis reported revenues of $1.9 billion in the last reported quarter, representing a year-over-year change of +6.7%. EPS of $1.08 for the same period compares with $1.30 a year ago.
For the current quarter, Prologis is expected to post earnings of $1.39 per share, indicating a change of +10.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Prologis. Also, the stock has a VGM Score of D.
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American Tower Corporation (AMT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
