Real estate investment trust American Tower missed estimates for third-quarter revenue on Tuesday due to diminished customer spending in its leasing business.
AMT's Q3 earnings are likely to have been hurt by high interest expenses and elevated churn despite solid demand for its communication real estate portfolio.
American Tower has outperformed on a YTD basis while raising their FY2024 guidance, thanks to the ongoing 5G upgrades and colocation growths. Even so, with over half of its sites already "upgraded with mid-band 5G," we may see FY2025 bring forth tougher YoY comparisons, as telecoms guide lower capex ahead. This is worsened by the prolonged densification process occurring only from 2026 onwards, along with the impact of the Sprint churn from Q4'24 onwards.
Besides Wall Street's top -and-bottom-line estimates for American Tower (AMT), review projections for some of its key metrics to gain a deeper understanding of how the company might have fared during the quarter ended September 2024.
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American Tower remains overvalued, underperforming the S&P 500 by 40% since our last recommendation against investing in the company. The company's substantial debt, lofty valuation, and moderate growth prospects limit its potential for future shareholder returns. Rising competition in the datacenter sector and a high payout ratio could hinder American Tower's long-term dividend growth.
AMT to gain from increased investment by wireless carriers in 4G and 5G networks. Solid business fundamentals and strategic capital allocation are add-ons.
Economic growth could slowly pick up in the U.S. and globally, as inflationary pressures continue to ease, with the Fed joining the rate-cut “party,” which could lead to even stronger corporate earnings growth following this year's robust gains.
Since July, markets have been volatile, and this volatility has provided plenty of opportunities for traders and those with a shorter-term investing time horizon to make some money.
The Federal Reserve's rate cuts should benefit the real estate market. Lower interest rates mean lower mortgage costs for buyers and an added incentive to sell for homeowners not eager to trade in a low-rate mortgage for a higher one.
Solid demand for AMT's wireless communication assets by network carriers and expansion efforts bode well. However, customer concentration is a major woe.
The relative resistance zone sits right around 240.