This REIT's Valuation is Up in the Clouds

American Tower has grown in conjunction with real estate

Aug 31, 2021 at 10:23 AM
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American Tower Corporation (NYSE:AMT) is one of the largest real estate investment trusts (REIT) in the world. As real estate and home prices skyrocket, the REIT has had quite the year. But have investors missed the hype train?

American Tower is up nearly 30% in 2021, and scored a record high of $291.82 on Aug. 20. Pullbacks along the way have been met by AMT's ascending 50-day moving average. Moreover, American Tower stock offers a forward dividend of $5.08 and a dividend yield of 1.78%.

AMT Stock Chart

From a fundamental point of view, American Tower has maintained strong and consistent growth. AMT's trailing 12-month revenues are up 7% compared to fiscal 2020 figures and have increased 29% since fiscal 2017. In addition, American Tower's trailing 12-month net income has grown 31% compared to fiscal 2020 and has increased 80% since fiscal 2017.

However, American Tower stock's biggest fundamental downfall can be found in AMT's valuation. American Tower stock has a sky-high forward price-earnings ratio of 58.14, meaning AMT has already priced multiple years of growth. Moreover, considering American Tower’s relatively average growth rate into account, it is difficult to imagine AMT maintaining its current valuation for much longer. Overall, American Tower stock does not seem to merit a price-earnings ratio of 58.76.

 

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