Briefing From The Editor -- Crown Castle Stock

Crown Castle logged a -0.3% change during today's morning session, and is now trading at a price of $112.45 per share.

Crown Castle returned losses of -39.3% last year, with its stock price reaching a high of $187.73 and a low of $110.22. Over the same period, the stock underperformed the S&P 500 index by -42.0%. As of April 2023, the company's 50-day average price was $122.39. Crown Castle owns, operates and leases more than 40,000 cell towers and approximately 85,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. Based in Houston, TX, the large-cap Real Estate company has 5,000 full time employees. Crown Castle has offered a 5.4% dividend yield over the last 12 months.

Exceptional Profitability Overshadowed by Excessive Leverage:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $5,773 $5,840 $6,340 $6,986
Operating Margins 27.6% 33.3% 31.9% 35.2%
Net Margins 14.95% 18.08% 17.29% 23.98%
Net Income (MM) $863 $1,056 $1,096 $1,675
Net Interest Income -$677,000 -$687,000 -$656,000 -$696,000
Depreciation & Amort. -$1,574,000 -$1,608,000 -$1,644,000 -$1,707,000
Earnings Per Share $1.79 $2.35 $2.53 $3.86
EPS Growth n/a 31.28% 7.66% 52.57%
Diluted Shares (MM) 418 425 434 434
Free Cash Flow (MM) $641 $1,431 $1,498 $1,568
Capital Expenditures (MM) -$2,059 -$1,624 -$1,229 -$1,310
Net Current Assets (MM) -$26,778 -$28,203 -$29,528 -$30,255
Current Ratio 0.63 0.56 0.62 0.45
Long Term Debt (MM) $18,021 $19,151 $20,557 $20,910
Net Debt / EBITDA 5.81 5.75 6.05 5.35

Crown Castle has strong margins with a positive growth rate and exceptional EPS growth. Additionally, the company's financial statements display a pattern of improving cash flows and growing revenues and decreasing reinvestment in the business. However, the firm has a highly leveraged balance sheet.

Crown Castle's Valuation Is in Line With Its Sector Averages:

Crown Castle has a trailing twelve month P/E ratio of 31.7, compared to an average of 24.81 for the Real Estate sector. Based on its EPS guidance of $3.47, the company has a forward P/E ratio of 35.3. Crown Castle's PEG ratio is 3.35 on the basis of the 9.5% weighted average of the company and the broader market's EPS compound average growth rates. This suggests that the company's shares are overvalued. Furthermore, Crown Castle is likely overvalued compared to the book value of its equity, since its P/B ratio of 6.76 is higher than the sector average of 2.24. The company's shares are currently trading 258.3% above their Graham number.

Crown Castle Has an Average Rating of Buy:

The 15 analysts following Crown Castle have set target prices ranging from $135.0 to $162.0 per share, for an average of $149.07 with a buy rating. As of April 2023, the company is trading -17.9% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

Crown Castle has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 92.7% of the company's shares, and the insider ownership rate stands at 0.35%, suggesting a small amount of insider investors. The largest shareholder is the Vanguard Group, Inc., whose 13% stake in the company is worth $6,446,961,184.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.