SBA Communications (SBAC) AI Stock Analysis

855 Followers

Top Page

SBA Communications

(NASDAQ:SBAC)

73Outperform

SBA Communications' strong profitability and strategic acquisitions position it well in the market. Yet, the high leverage and negative equity pose risks. Technical indicators suggest positive momentum but caution due to potential overbought signals. The company's valuation is relatively high, which could limit upside potential. Overall, the stock is a decent performer with some risks.

Positive Factors

Dividends

SBA announced a 13% dividend increase with earnings.

Earnings

SBA kicked off Tower earnings season with better than expected fourth quarter results.

Negative Factors

Churn Impact

Elevated international churn, particularly in Brazil, due to customer consolidation will continue to present a headwind to results in the near term.

Foreign Exchange Impact

FX headwinds are expected to have a $25 million negative impact on site leasing revenue in 2025.

SBA Communications (SBAC) vs. S&P 500 (SPY)

Market Cap

$22.92B

Dividend Yield1.85%

Average Volume (3M)1.09M

Price to Earnings (P/E)30.6

Beta (1Y)0.36

Revenue Growth-1.18%

EPS Growth50.21%

CountryUS

Employees1,720

SectorReal Estate

Sector Strength71

IndustryREIT - Specialty

Share Statistics

EPS (TTM)6.94

Shares Outstanding108,028,120

10 Day Avg. Volume1,413,324

30 Day Avg. Volume1,091,515

Financial Highlights & Ratios

PEG Ratio0.61

Price to Book (P/B)N/A

Price to Sales (P/S)8.90

Price to Cash Flow (P/CF)19.20

P/FCF Ratio23.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$245.08

Price Target Upside11.82% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

SBA Communications Business Overview & Revenue Model

Company DescriptionSBA Communications Corporation is a first choice provider and leading owner and operator of wireless communications infrastructure in North, Central, and South America and South Africa. By Building Better Wireless, SBA generates revenue from two primary businesses site leasing and site development services. The primary focus of the Company is the leasing of antenna space on its multi-tenant communication sites to a variety of wireless service providers under long-term lease contracts. For more information please visit: www.sbasite.com.

How the Company Makes MoneySBA Communications makes money primarily through leasing antenna space on its towers and other wireless infrastructure to wireless service providers, broadcasters, and other companies. The company generates recurring revenue by entering into long-term lease agreements with these tenants, which often include built-in rent escalations over time. Additionally, SBA Communications expands its revenue streams by building new towers and acquiring existing ones, thereby increasing its portfolio of rentable sites. Key factors contributing to its earnings include strategic partnerships with major wireless carriers, ongoing demand for network expansion and upgrades, and its ability to adapt to the evolving technological landscape of the telecommunications industry.

SBA Communications Financial Statement Overview

Summary

SBA Communications demonstrates strong profitability and cash flow generation, with high margins and operational efficiency. However, the balance sheet reflects high leverage and negative equity, which poses potential financial risks. The company should focus on improving its equity position for greater financial stability.

Income Statement

Very Positive

SBA Communications shows strong profitability with a high gross profit margin of 78.32% and a net profit margin of 27.97% for TTM. The company's revenue has decreased slightly by 1.18% year-over-year, but consistent EBIT and EBITDA margins indicate stable operational efficiency.

Balance Sheet

Neutral

The company has a concerning negative equity, leading to a lack of balance sheet stability. The debt-to-equity ratio cannot be calculated due to negative equity, indicating high leverage risks. Despite these challenges, SBA Communications maintains solid asset management given its high asset base.

Cash Flow

Positive

SBA Communications exhibits robust cash flow generation, with a strong operating cash flow to net income ratio of 1.78 and a free cash flow to net income ratio of 1.39 for TTM. However, the free cash flow growth rate has declined by approximately 20.05% from the previous year, highlighting the need for improvement in cash flow growth.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.68B	2.71B	2.63B	2.31B	2.08B
	Gross Profit
2.68B	2.08B	1.96B	1.76B	1.61B
	EBIT
1.44B	923.66M	925.41M	782.50M	451.14M
	EBITDA
1.47B	1.70B	1.68B	1.51B	1.39B
	Net Income Common Stockholders
749.54M	501.81M	461.43M	237.62M	24.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
189.84M	209.59M	143.71M	367.28M	308.56M
	Total Assets
11.42B	10.18B	10.59B	9.80B	9.16B
	Total Debt
3.35B	14.46B	15.17B	14.52B	13.43B
	Net Debt
3.16B	14.25B	15.03B	14.16B	13.12B
	Total Liabilities
16.47B	15.31B	15.83B	15.07B	13.97B
	Stockholders Equity
-5.11B	-5.17B	-5.28B	-5.28B	-4.82B
Cash Flow		Free Cash Flow
1.11B	1.31B	1.10B	1.06B	997.47M
	Operating Cash Flow
1.33B	1.54B	1.32B	1.19B	1.13B
	Investing Cash Flow
-809.31M	-468.25M	-1.39B	-1.42B	-446.37M
	Financing Cash Flow
645.74M	-1.02B	-167.47M	339.26M	-469.02M

SBA Communications Technical Analysis

Technical Analysis Sentiment

Positive

Last Price219.18

Price Trends

50DMA

213.96

Positive

100DMA

211.03

Positive

200DMA

216.84

Positive

Market Momentum

MACD

1.62

Positive

RSI

56.87

Neutral

STOCH

57.52

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SBAC, the sentiment is Positive. The current price of 219.18 is above the 20-day moving average (MA) of 218.22, above the 50-day MA of 213.96, and above the 200-day MA of 216.84, indicating a bullish trend. The MACD of 1.62 indicates Positive momentum. The RSI at 56.87 is Neutral, neither overbought nor oversold. The STOCH value of 57.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SBAC.

SBA Communications Risk Analysis

SBA Communications disclosed 34 risk factors in its most recent earnings report. SBA Communications reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

SBA Communications Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SBAC	73 Outperform	$22.92B	30.60	-14.67%	1.85%	-1.18%	50.21%
AMT	73 Outperform	$97.52B	43.25	91.38%	3.04%	-3.05%	51.74%
EQIX	71 Outperform	$75.02B	90.62	6.27%	2.25%	6.84%	-17.14%
UNIT	65 Neutral	$1.05B	11.17	-3.72%	13.95%	1.49%	―
Sector *	61 Neutral	$4.24B	15.87	-3.65%	12.20%	6.29%	-21.37%
CCI	55 Neutral	$41.44B	33.81	-124.94%	6.48%	-5.92%	-359.56%
LUMN	47 Neutral	$3.55B	―	-12.49%	―	-9.95%	99.47%

* Real Estate Sector Average

Performance Comparison

SBAC

SBA Communications

219.18

23.10

11.78%

AMT

American Tower

213.22

40.81

23.67%

LUMN

Lumen Technologies

3.46

2.09

152.55%

CCI

Crown Castle

96.67

6.73

7.48%

EQIX

Equinix

776.83

47.77

6.55%

UNIT

Uniti Group

4.30

-0.91

-17.47%

SBA Communications Earnings Call Summary

Earnings Call Date: Feb 24, 2025 | % Change Since: 3.51% | Next Earnings Date: Apr 28, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture. While the company showcased strong domestic performance, strategic acquisitions, and record tower builds planned for 2025, it also faces significant international churn challenges, foreign exchange and interest rate headwinds, and ongoing impacts from Sprint churn.

Highlights

Strong Domestic Performance

Domestic new carrier activity or bookings continued to increase sequentially from the third quarter. The US-based services business had its best quarter of the year, and leasing application backlogs grew throughout the quarter, finishing at the highest level of the year.

Strategic Millicom Acquisition

Entered into an agreement to purchase approximately 7,000 towers from Millicom in Central America. This transaction positions SBA as the leading tower operator in the region with over 10,500 pro forma sites.

Financial Health and Capital Allocation

Invested over $550 million in asset acquisitions, stock repurchases, and new tower builds while growing the dividend at an industry-leading 15%. Improved balance sheet and liquidity position with a net debt to adjusted EBITDA ratio of 6.1, the lowest in company history.

Record Tower Builds Planned for 2025

Expecting to build up to 800 new towers in 2025, the largest number for SBA in over 20 years, with the majority in Central America.

Lowlights

International Churn Challenges

International churn remains elevated due to customer consolidations, particularly in Brazil, which continues to impact cash flows negatively. The churn rate was 6% in the fourth quarter of 2024.

Foreign Exchange and Interest Rate Headwinds

The macro interest rate environment and a strong dollar hindered stock performance. FX is expected to have a negative $25 million year-over-year impact on site leasing revenue for 2025.

Sprint Churn Impact

Sprint-related churn continues to impact revenue, with an anticipated $50 million to $52 million impact in 2025.

Company Guidance

In the SBA fourth quarter 2024 earnings call, the company provided several key metrics for 2025 and beyond. They anticipate a strong start to 2025 with a projected increase in new leasing business and services, expecting a year-over-year increase in their services segment. SBA's 2025 outlook includes domestic new leases and amendments between $35 million and $39 million, with Sprint-related churn estimated at $50 million to $52 million. Internationally, they foresee steady network investment with new leases and amendments projected to generate $16 million to $18 million in revenue, despite an expected churn of $27 million to $31 million due to ongoing consolidation activities. The company also highlighted their strategic acquisition of approximately 7,000 towers from Millicom in Central America, positioning them as the leading tower operator in the region. This transaction is expected to close around September 1, 2025, contributing approximately $42 million to cash site leasing revenue. Additionally, SBA ended 2024 with their net debt to adjusted EBITDA at 6.1 times, maintaining a strong balance sheet and liquidity position, which supports ongoing investments and shareholder returns through dividends and potential share repurchases.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.