SBA Communications yesterday reported results for the quarter ended September 30, 2016. Although SBA fell short of growth targets, SBA President/CEO Jeffrey Stoops said following the call that the shortage was minor, less than 5 percent, and primarily due to project delays and not indicative of any market conditions. “It’s not about volume,” he said, “there’s plenty of opportunity.” Overall, Stoops said, his company “has the strongest operating margins in the industry.”
Nick DelDeo, analyst at MoffettNathanson concurred. “SBA remains our top pick across our coverage universe. It may not have the “cool” attributes (i.e., Crown’s fiber or American’s expansive international portfolio) but it has plenty else going for it,” DelDeo said. “Sentiment around SBA remains depressed, its valuation is exceptionally attractive, especially when taking into account business mix and accounting quality, it has the flexibility to allocate capital towards repurchasing undervalued stock, and the risk-reward embedded in the outlook for the business is sharply skewed to the upside.
SBA should continue to pound out quarter after quarter of solid results; eventually the market will notice,” he said.
SBA issued the following statement following the report:
“The third quarter was another solid quarter for SBA,” commented Stoops. “Organic leasing demand was steady, consistent with both the type and amount of customer activity experienced all year. Amendment activity in the U.S. was very strong, with our customers adding to or modifying existing macro sites to refarm 2G and 3G uses to 4G LTE or to add new spectrum to their networks. In our international markets, customer activity was more balanced between new macro sites and additions or modifications to existing macro sites. Our Outlook for the Fourth Quarter of 2016 assumes customer activity remains materially the same as we have experienced during the first three quarters of the year. We executed very well in the third quarter, producing once again industry-leading operating margins. We allocated capital in the quarter opportunistically and in our opinion very attractively, spread among portfolio growth, stock repurchases and ground purchases. We ended the quarter within our target leverage range. Finally, we completed a refinancing of a material portion of our indebtedness on very favorable terms, substantially reducing our interest costs on that portion of our capital structure. AFFO continues to increase, and our share count continues to decrease. We expect this same trend to continue in the fourth quarter. Our third quarter success in each of these areas, organic growth, operating performance, asset growth, stock repurchases and financing, positively contributes to our long term goal of producing AFFO of $10 or more per share in 2020.”
See the full statement here.
Published November 2, 2016