Quick Update for AMT Investors

We've been asking ourselves recently if the market has placed a fair valuation on American Tower. Let's dive into some of the fundamental values of this large-cap Real Estate company to determine if there might be an opportunity here for value-minded investors.

The Market May Be Overvaluing American Tower's Earnings and Assets:

American Tower, one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of nearly 226,000 communications sites and a highly interconnected footprint of U. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 24.81 and an average price to book (P/B) ratio of 2.24. In contrast, American Tower has a trailing 12 month P/E ratio of 66.6 and a P/B ratio of 16.81.

American Tower's PEG ratio is 4.65, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Exceptional Profitability Overshadowed by Excessive Leverage:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $7,580 $8,042 $9,357 $10,711
Operating Margins 35.5% 35.9% 33.5% 22.0%
Net Margins 24.9% 21.02% 27.44% 16.49%
Net Income (MM) $1,888 $1,691 $2,568 $1,766
Net Interest Expense (MM) -767 -754 -830 -1,065
Net Interest Expense (MM) -$767 -$754 -$830 -$1,065
Depreciation & Amort. (MM) -$1,796 -$1,871 -$2,333 -$3,355
Earnings Per Share $4.24 $3.79 $5.66 $2.93
EPS Growth n/a -10.61% 49.34% -48.23%
Diluted Shares (MM) 446 446 453 466
Free Cash Flow (MM) $2,761 $2,850 $3,443 $1,823
Capital Expenditures (MM) -$991 -$1,032 -$1,377 -$1,874
Net Current Assets (MM) -$33,661 -$39,547 -$57,089 -$51,164
Current Ratio 0.47 0.79 0.41 0.44
Long Term Debt (MM) $21,127 $28,498 $38,686 $34,156
Net Debt / EBITDA 5.18 6.32 7.01 6.03

American Tower has growing revenues and increasing reinvestment in the business, strong margins with a negative growth trend, and consistent free cash flow. However, the firm suffers from declining EPS growth and a highly leveraged balance sheet.

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.