It hasn't been a great afternoon session for SBA Communications investors, who have watched their shares sink by -1.2% to a price of $191.14. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
SBA Communications Is Too Expensive at Current Levels:
SBA Communications Corporation is a leading independent owner and operator of wireless communications infrastructure including towers, buildings, rooftops, distributed antenna systems (DAS) and small cells. The company belongs to the Real Estate sector, which has an average price to earnings (P/E) ratio of 27.31. In contrast, SBA Communications has a trailing 12 month P/E ratio of 23.5 based on its earnings per share of $8.14.
SBA Communications has moved -16.6% over the last year compared to 18.5% for the S&P 500 -- a difference of -35.1%. SBA Communications has a 52 week high of $245.16 and a 52 week low of $185.45.
Exceptional Profitability Overshadowed by Excessive Leverage:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,015 | $2,083 | $2,309 | $2,633 | $2,712 | $2,680 |
| Operating Margins | 28% | 30% | 34% | 35% | 34% | 54% |
| Net Margins | 7% | 1% | 10% | 18% | 19% | 28% |
| Net Income (M) | $147 | $24 | $238 | $461 | $502 | $750 |
| Net Interest Expense (M) | $387 | $352 | $361 | $348 | $397 | $395 |
| Depreciation & Amort. (M) | $282 | $287 | $272 | $274 | $272 | $116 |
| Diluted Shares (M) | 115 | 113 | 111 | 109 | 109 | 108 |
| Earnings Per Share | $1.28 | $0.21 | $2.14 | $4.22 | $4.61 | $6.94 |
| EPS Growth | n/a | -83.59% | 919.05% | 97.2% | 9.24% | 50.54% |
| Avg. Price | $212.67 | $281.97 | $309.97 | $325.88 | $253.69 | $193.4 |
| P/E Ratio | 163.59 | 1281.68 | 142.84 | 76.32 | 54.67 | 27.79 |
| Free Cash Flow (M) | $816 | $997 | $1,056 | $1,071 | $1,308 | $1,107 |
| CAPEX (M) | $154 | $129 | $134 | $214 | $237 | $228 |
| EV / EBITDA | 40.1 | 46.02 | 43.49 | 39.95 | 33.59 | 22.87 |
| Total Debt (M) | $10,857 | $11,120 | $12,327 | $12,892 | $12,967 | $14,780 |
| Net Debt / EBITDA | 12.42 | 11.74 | 11.34 | 10.63 | 10.67 | 9.4 |
| Current Ratio | 0.32 | 0.77 | 1.0 | 0.69 | 0.36 | 1.1 |
SBA Communications has growing revenues and increasing reinvestment in the business and strong operating margins with a positive growth rate. Additionally, the company's financial statements display exceptional EPS growth and generally positive cash flows. However, the firm has a highly leveraged balance sheet. Finally, we note that SBA Communications has just enough current assets to cover current liabilities, as shown by its current ratio of 1.1.
