SBA Communications Corporation SBAC is scheduled to report fourth-quarter and full-year 2024 results on Feb. 24 after the market closes. The company’s quarterly results are likely to display revenue growth, while adjusted funds from operations (AFFO) per share may decline year over year.

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In the last reported quarter, this Boca Raton, FL-based communications tower REIT reported an AFFO per share of $3.32, which met the Zacks Consensus Estimate.  Results reflected a marginal improvement in domestic cash site-leasing revenues due to increased carrier activity. However, lower revenues clocked by site development hurt the results to some extent.

Over the preceding four quarters, SBAC’s AFFO per share surpassed the Zacks Consensus Estimate on two occasions, met once and missed in the remaining period, with the average beat being 0.38%. The graph below depicts this surprise history:

SBA Communications Corporation Price and EPS Surprise

SBA Communications Corporation price-eps-surprise | SBA Communications Corporation Quote

Factors at Play for SBA Communications

With increasing smartphone adoption, greater broadband demand and plans for 5G service worldwide, wireless service providers and carriers have been deploying additional equipment for existing networks to enhance network coverage and capacity. This has been spurring the demand for SBA Communications’ wireless communications infrastructure, which might have benefited its fourth-quarter performance favorably.

Moreover,the company’s resilient and stable site-leasing business model and portfolio expansion moves, domestically and internationally, to capitalize on the industry’s secular trends are encouraging.

However, the ongoing consolidation in the wireless industry is likely to have impacted the company’s fourth-quarter performance. High interest expenses and elevated churn in certain markets where the company operates might have been other deterrents to some extent.

Projections for SBA Communications

The Zacks Consensus Estimate for fourth-quarter site-leasing revenues, which account for the lion’s share of total revenues, is pegged at $639.2 million, indicating a marginal increase from the year-ago quarter’s $636.1 million. Site-development revenues are also expected to be marginally higher in the fourth quarter, with the consensus mark estimated at $39.7 million, up from $38.9 million reported in the year-ago period.

The Zacks Consensus Estimate for total quarterly revenues is pegged at $681.7 million, indicating an increase of 1% year over year.

The company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for quarterly AFFO per share has been revised southward at $3.36 over the past week. The figure implies a marginal year-over-year decline.

For full-year 2024, SBAC expected its AFFO per share in the band of $13.20-$13.45, site-leasing revenues in the band of $2,520-$2,530 million, site-development revenues in the range of $140-$150 million and adjusted EBITDA in the range of $1,890-$1,900 million.

For the full year, the Zacks Consensus Estimate for AFFO per share stands at $13.24, indicating a 0.46% increase year over year. For full-year 2024, the consensus estimate for revenues stands at $2.67 billion, suggesting a decline of 1.62% year over year.

What Our Quantitative Model Predicts for SBA Communications

Our proven model does not conclusively predict a surprise in terms of AFFO per share for SBA Communications this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is not the case here.

SBA Communications currently has an Earnings ESP of -2.38% and a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT sector — Gaming and Leisure Properties GLPI and Ryman Hospitality Properties RHP— that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

Gaming and Leisure Properties, scheduled to report quarterly numbers on Feb. 20, has an Earnings ESP of +0.83% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ryman Hospitality Properties is slated to report quarterly numbers on Feb. 20. It has an Earnings ESP of +4.91% and carries a Zacks Rank of 3 at present.

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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