Crown Castle International Corp. CCI is slated to release its first-quarter 2015 results on Apr 22, 2015, after market close.
Last quarter, Crown Castle had delivered a positive earnings surprise of 32.26%. Earnings, though ahead of the Zacks Consensus Estimate in two of the last four quarters, have registered an average negative surprise of 5.04%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Crown Castle’s rapidly increasing tower network should drive the company’s top and bottom line, going forward. The company has also raised its outlook for full year 2015. Notably, for the first quarter of 2015, Crown Castle expects Site Rental revenues in the range of $762–$767 million. We believe an extensive tower portfolio, strong financial outlook, continuous acquisitions and accelerated 4G LTE network deployment will spur growth for Crown Castle, going forward.
Meanwhile, the company is also mulling over vending its Australian subsidiary CCAL, wherein it owns a 77.6% stake.
However, a highly leveraged balance sheet, foreign currency exchange rate risks, high customer concentration and continually changing technology may dent Crown Castle’s profitability in the coming quarters. Further, the ongoing consolidation trend among telecom and cable TV operators may reduce demand for cell tower deployments and result in significant financial fluctuations for Crown Castle.
Earnings Whispers?
Our proven model does not conclusively show that Crown Castle is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below:
Zacks ESP: Crown Castle has an earnings ESP of -2.86%. This is because the Most Accurate estimate stands at 34 cents while the Zacks Consensus Estimate is pegged higher at 35 cents.
Zacks Rank: Crown Castle has a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.
On the other hand, we caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may consider instead, as our model shows they have the right combination of elements to post an earnings beat this quarter:
Empire State Realty Trust, Inc. ESRT, with earnings ESP of +10.53% and a Zacks Rank #1.
Chesapeake Lodging Trust CHSP, with earnings ESP of +4.17% and a Zacks Rank #2.
Kilroy Realty Corp. KRC, with earnings ESP of +3.23% and a Zacks Rank #2.
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