Diving Into Crown Castle Stock Before Earnings Drop

Crown Castle is set to report second-quarter earnings on July 21

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Crown Castle International Corp. (NYSE:CCI) is an American real estate investment trust (REIT) and one of the nation’s largest providers of shared communications infrastructure. Crown Castle's network includes over 40,000 cell towers and nearly 80,000 route miles of fiber supporting small cells and fiber solutions. CCI helps connect cities and businesses to data, technology, and wireless services. This afternoon, CCI was last seen trading flat at $200.55, but earlier touched a fresh record high of $202.46.

Yesterday, July 7, in conjunction with reaching a then, all-time high of $201.77, Crown Castle International announced plans to release its second quarter of 2021 financial results after the close on Wednesday, July 21. CCI has also scheduled a conference call for Thursday, July 22.

Crown Castle has struck out when stepping up to the earnings plate over the past year, missing earnings expectations on all four of its most earnings reports. For Q2 of 2020, Crown Castle missed analysts’ estimates by a margin of $0.09 and reported an earnings per share (EPS) of $0.41. For Q3 of 2020, CCI's earnings decreased to $0.38 per share and missed expectations by a margin of $0.12. For Q4 of 2020, Crown Castle posted another decrease in earnings, dropping to $0.34 per share and missing estimates by a margin of $0.29. For the first quarter of 2021, Crown Castle reported an EPS of $0.28 and missed expectations by a margin of $0.25.

CCI has increased by about 17% in price year-over-year and is up 37% from its early March bottom of $146.15 in early March. Additionally, shares of Crown Castle stock have grown by 30% year-to-date and now has a forward dividend of $5.32 and a dividend yield of 2.65%.

From a fundamental perspective, Crown Castle stock is undoubtedly overvalued at this time. CCI trades at an extremely elevated price-earnings ratio of 95.86 and has an exaggerated forward price-earnings ratio of 69.93. However, with a market cap of $85 billion and a business model that ensures long-lasting dependency for a good portion of the country, it may be said that Crown Castle is amongst the few companies that are “too big to fail.” For that reason, CCI can also get away with only having $254 million in cash on their balance sheet and a whopping $26 billion in total debt.

That being said, CCI sports affordably priced premiums at the moment. The security's Schaeffer's Volatility Index (SVI) of 17% stands in the low 7th percentile of readings in its annual range. This means options players are now pricing in low volatility expectations for the equity. 

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