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SBA Communications Corporation (SBAC)
NASDAQ:SBAC
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SBA Communications
(NASDAQ:SBAC)73Outperform
Positive Factors
Carrier Activity
Carrier activity levels in the US continued to grow and finished 2024 with the highest backlogs of the year for both leasing and services.
Valuation
Valuation remains attractive, with SBA trading at near-term low valuations, making the stock attractive for purchase.
Negative Factors
International Churn
Elevated international churn, particularly in Brazil, due to customer consolidation will continue to present a headwind to results in the near term.
SBA Communications (SBAC) vs. S&P 500 (SPY)
Market Cap
$23.72B
Dividend Yield1.79%
Average Volume (3M)771.54K
Price to Earnings (P/E)31.8
Beta (1Y)0.68
Revenue Growth-1.18%
EPS Growth50.21%
CountryUS
Employees1,787
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)6.94
Shares Outstanding107,615,240
10 Day Avg. Volume981,185
30 Day Avg. Volume771,537
Financial Highlights & Ratios
PEG Ratio0.63
Price to Book (P/B)N/A
Price to Sales (P/S)8.85
Price to Cash Flow (P/CF)19.10
P/FCF Ratio23.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$245.46Price Target Upside9.71% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
SBA Communications Business Overview & Revenue Model
Company DescriptionSBA Communications Corporation (SBAC) is a leading independent owner and operator of wireless communications infrastructure, primarily consisting of towers and rooftops. The company operates in the real estate investment trust (REIT) sector, providing shared site space for wireless service providers to install their antennas and other equipment. SBA Communications plays a critical role in facilitating the deployment of advanced wireless networks, including 5G, by offering infrastructure solutions that enhance network coverage and capacity.
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
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.85
Very Positive
Balance Sheet
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.55
Neutral
Cash Flow
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.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Positive
223.73
Price Trends
205.58
Positive
215.42
Positive
214.53
Positive
Market Momentum
4.57
Negative
67.46
Neutral
58.94
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 223.73 is above the 20-day moving average (MA) of 213.40, above the 50-day MA of 205.58, and above the 200-day MA of 214.53, indicating a bullish trend. The MACD of 4.57 indicates Negative momentum. The RSI at 67.46 is Neutral, neither overbought nor oversold. The STOCH value of 58.94 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 38 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 |
|---|---|---|---|---|---|---|---|
73 Outperform | $23.72B | 31.78 | -14.67% | 1.79% | -1.18% | 50.21% | |
73 Outperform | $96.73B | 42.96 | 91.38% | 3.13% | -3.05% | 51.74% | |
70 Outperform | $84.86B | 102.52 | 6.27% | 2.00% | 6.84% | -17.14% | |
63 Neutral | $41.13B | 33.57 | 20.49% | 6.58% | -6.76% | -21.14% | |
62 Neutral | $1.29B | 13.72 | -3.72% | 11.49% | 1.49% | ― | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
55 Neutral | $5.10B | ― | -12.49% | ― | -9.95% | 99.47% |
* Real Estate Sector Average
Performance Comparison
SBAC
SBA Communications
223.73
4.06
1.85%
AMT
American Tower
212.29
12.31
6.16%
LUMN
Lumen Technologies
5.30
3.54
201.14%
CCI
Crown Castle
97.73
-8.06
-7.62%
EQIX
Equinix
859.52
-15.97
-1.82%
UNIT
Uniti Group
5.32
-0.71
-11.77%
SBA Communications Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: 5.12% | 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.