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SBA Communications Corp Class A SBAC

Morningstar Rating
$251.49 +1.10 (0.44%)
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Company Report

SBA Earnings: Amid Reduced Carrier Spending, Results Remain Good, and Management Is Opportunistic

SBA’s third-quarter results showed very little impact from the reduced network investment among U.S. wireless carriers, and we maintain that fears of a dramatic tower business deterioration are unfounded. We expect the slowdown in carrier spending will be only slightly more apparent in 2024. While SBA continued operating its business well in the third quarter, it finally—in our view—chose to buy back shares at the right time. SBA has not been our favorite tower stock over the past several years, but we are increasingly pleased with how management is running the business, and we think, even after a big bounce off the recent lows, the stock is materially undervalued. We’re maintaining our $260 fair value estimate.

Price vs Fair Value

SBAC is trading at a 3% discount.
Price
$251.50
Fair Value
$894.00
Uncertainty
Medium
1-Star Price
$194.00
5-Star Price
$148.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Carrier investment in towers will have to continue as mobile data usage continues to grow rapidly. Greater use of the Internet of Things, 5G, and video content should keep this trend in place for years to come.

Bears

The company’s extreme use of financial leverage could become problematic if the company were to face an industry downturn or a less favorable economic environment.

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News

Trading Information

Previous Close Price
$250.39
Day Range
$251.12256.40
52-Week Range
$185.23309.41
Bid/Ask
$243.51 / $257.80
Market Cap
$27.13 Bil
Volume/Avg
1.0 Mil / 839,802

Key Statistics

Price/Earnings (Normalized)
50.87
Price/Sales
10.08
Dividend Yield
1.35%
Dividend Yield (Forward)
1.35%
Total Yield
1.55%

Company Profile

SBA Communications owns and operates almost 40,000 cell towers throughout North America, South America, and Africa. It leases space on its towers to wireless service providers, who install equipment on the towers to support their wireless networks. The company has a very concentrated customer base, with most revenue in each market being generated by just the top few mobile carriers. The company owns more than 17,000 towers in the U.S., which accounted for about three fourths of the company’s total revenue in 2022. Internationally, SBA’s greatest presence is in Brazil, where it operates roughly 10,000 towers. SBA operates as a real estate investment trust, or REIT.
Sector
Real Estate
Industry
REIT - Specialty
Stock Style Box
Mid Growth
Total Number of Employees
1,834

Competitors

Valuation

Metric
SBAC
AMT
CCI
Price/Earnings (Normalized)
50.8745.7127.79
Price/Book Value
21.677.62
Price/Sales
10.088.907.19
Price/Cash Flow
18.8417.8514.36
Price/Earnings
SBAC
AMT
CCI

Financial Strength

Metric
SBAC
AMT
CCI
Quick Ratio
0.580.460.29
Current Ratio
0.690.560.44
Interest Coverage
2.181.442.98
Quick Ratio
SBAC
AMT
CCI

Profitability

Metric
SBAC
AMT
CCI
Return on Assets (Normalized)
6.70%2.59%4.68%
Return on Equity (Normalized)
31.98%25.27%
Return on Invested Capital (Normalized)
11.17%4.73%7.30%
Return on Assets
SBAC
AMT
CCI

REIT - Specialty Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
AMT
American Tower CorpBbsgsn$98.2 Bil
EQIX
Equinix IncZnrws$75.9 Bil
CCI
Crown Castle IncSkxlzm$50.8 Bil
DLR
Digital Realty Trust IncSqqlpkh$41.0 Bil
WY
Weyerhaeuser CoQrzrz$22.8 Bil
IRM
Iron Mountain IncGjnysmq$19.3 Bil
GLPI
Gaming and Leisure Properties IncQhsy$12.6 Bil
RYN
Rayonier IncKzrky$4.5 Bil
UNIT
Uniti Group IncYcxvw$1.3 Bil