A Short Intro for Crown Castle Investors

Crown Castle shares fell by -1.2% during the day's evening session, and are now trading at a price of $107.0. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

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

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. 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, Crown Castle has a trailing 12 month P/E ratio of 27.2 and a P/B ratio of 6.22.

When we divide Crown Castle's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -5.85. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.

Exceptional Profitability Overshadowed by Excessive Leverage:

2020-03-10 2021-02-22 2022-02-22 2023-02-24
Revenue (MM) $5,763 $5,840 $6,340 $6,986
Operating Margins 27.6% 33.3% 31.9% 35.2%
Net Margins 14.92% 18.08% 20.22% 23.98%
Net Income (MM) $860 $1,056 $1,282 $1,675
Net Interest Expense (MM) -$677 -$687 -$656 -$696
Depreciation & Amort. (MM) -$1,572 -$1,608 -$1,644 -$1,707
Earnings Per Share $1.79 $2.62 $2.95 $3.93
EPS Growth n/a 46.37% 12.6% 33.22%
Diluted Shares (MM) 418 425 434 434
Free Cash Flow (MM) $4,755 $4,679 $4,018 $4,188
Capital Expenditures (MM) -$2,057 -$1,624 -$1,229 -$1,310
Net Current Assets (MM) -$26,764 -$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 5.8 5.72 5.71 5.31

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