Yahoo Finance SBAC Stock Rises 22% in Three Months: Will the Trend Continue?
Shares of SBA Communications SBAC have rallied 22% over the past three months, outperforming the industry's upside of 17.8%.
This tower REIT is a leading independent owner and operator of wireless communications infrastructure. The company generates revenues from two primary businesses — site leasing (94.8% of the total revenues in the second quarter of 2024) and site development services (5.2%).
Analysts seem positive about this company carrying a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its third-quarter 2024 FFO per share has been revised marginally northward to $3.32 over the past two months.
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Factors Behind SBAC Stock Price Rise: Will This Trend Last?
The advancement in mobile technology, such as 4G and 5G networks, and the proliferation of bandwidth-intensive applications have propelled growth in mobile data usage globally. With increasing smartphone adoption, greater broadband demand and plans for 5G services worldwide, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. SBAC is already benefitting from this rising demand for tower assets, and given its future plans, the company is likely to capitalize on this upbeat trend.
SBA Communications offers wireless service providers assistance in developing and maintaining their networks. The company’s services include site identification and acquisition, as well as obtaining zoning approvals and permitting networks representing all technologies. It also provides a broad range of cell site equipment installation, optimization and integration services. Given the vast array of services the company offers owing to its extensive site development experience, it is likely to propel its growth over the long term.
SBA Communications continues to expand its business into domestic and select international markets with high growth characteristics. In the first half of 2024, the company acquired 128 towers and related assets. In the second quarter of 2024, it also built 100 towers. Such portfolio expansion efforts will position SBA Communications to leverage secular trends in mobile data usage and wireless spending growth worldwide.
SBA Communications has decent balance sheet strength and sufficient liquidity. The company exited the second quarter of 2024 with $309.4 million in cash and cash equivalents, short-term restricted cash and short-term investments. As of July 29, 2024, the company had $30 million outstanding under its $2.0 billion revolving credit facility. A robust balance sheet and operational strength provide flexibility to the company to be opportunistic regarding future investment choices.
Solid dividend payouts are arguably the biggest enticements for REIT shareholders, and SBA Communications remains committed to that. Its dividend hikes demonstrate its commitment to drive shareholder value and superior capital-distribution ability. The company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 22.42%. Given SBA Communications’ decent financial position and a lower-than-industry dividend payout rate, the dividend distribution is expected to be sustainable over the long run.
Key Risks for SBAC
High customer concentration and the ongoing consolidation in the wireless industry are concerns for the company’s top-line growth. Still elevated interest rates add to the company’s woes.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are Crown Castle Inc. CCI and Cousins Properties CUZ,each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Crown Castle’s 2024 FFO per share has been raised marginally northward to 6.97 over the past two months.
The Zacks Consensus Estimate for Cousins Properties’2024 FFO per share has been raised marginally upward to 2.67 over the past month.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs
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Crown Castle Inc. (CCI) : Free Stock Analysis Report
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SBA Communications Corporation (SBAC) : Free Stock Analysis Report
