Crown Castle’s Stock Struggles Despite Strong Infrastructure Assets
Market Overview and Company Profile
Houston, Texas-based Crown Castle Inc. (CCI) is a REIT company that provides shared communications infrastructure. It operates in several segments: Towers, Fiber, and Other. With a market capitalization of $44.3 billion, Crown Castle spans the top 100 markets across various states in the U.S.
As a large-cap stock, which typically includes companies valued at $10 billion or more, Crown Castle’s valuation is expected given its extensive network. The company currently owns over 40,000 towers, around 115,000 small cells either deployed or contractually committed, and approximately 90,000 route miles of fiber.
Recent Stock Performance
However, Crown Castle’s stock has recently dipped 15.8% from its 52-week high of $120.92, reached on September 16. In the past three months, CCI stock has fallen 12.3%, underperforming the Nasdaq Composite ($NASX), which saw a 19% increase during the same period.
Year-to-Date Analysis
On a longer-term basis, the outlook appears even bleaker. CCI has dropped 11.6% year-to-date and over 13% in the last 52 weeks, falling behind the NASX gains of 32.3% this year and 40.4% in the past year.
Additionally, CCI has been trading below its 50-day moving average since early October and below its 200-day average since early November, with some irregularities.
Factors Influencing Crown Castle’s Challenges
The main reasons for Crown Castle’s underperformance are declining revenues and earnings this year. Following its Q3 report on October 16, CCI stock fell 3.4% after the company cut its full-year net income forecast. This adjustment resulted from the cancellation of contracts for 7,000 new small cell nodes, leading to an anticipated asset write-down of $125 million to $150 million in the fourth quarter. In terms of net revenues, CCI reported a slight decrease to $1.65 billion, mainly due to reduced services and other revenue streams.
Positive Aspects from Recent Earnings
On a positive note, CCI recorded a 1% increase in site rentals compared to the same quarter last year, totaling approximately $1.6 billion. Additionally, its adjusted funds from operations (AFFO) rose 4.4% year-over-year to reach $801 million, with an AFFO per share of $1.84, surpassing analysts’ estimates by 6.4%.
Comparative Performance and Analyst Opinions
Compared to its competitor, American Tower Corporation (AMT), which has seen a 4.1% decline year-to-date and a 1.7% drop over the past year, CCI has struggled significantly more.
Currently, Crown Castle has a consensus “Hold” rating from the 19 analysts who cover its stock. The average price target for CCI stands at $115.94, suggesting a potential rise of 13.8% from its current levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are intended solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
