Is Crown Castle International Too Big To Fail?
Crown Castle International Corp. (NYSE: CCI) is an American real estate investment trust (REIT) and one of the largest providers of shared communications infrastructure nationwide. Crown Castle’s network includes over 40,000 cell towers and nearly 80,000 kilometers of fiber that support small cells and fiber solutions. CCI helps cities and businesses connect data, technology and wireless services. This afternoon, CCI was last traded at $ 200.55 but previously hit a new record high of $ 202.46.
Yesterday July 7th, combined with hitting an all-time high of $ 201.77, Crown Castle International announced plans to announce its financial results for the second quarter of 2021 after close of trading on Wednesday July 21st Thursday July 22nd.
Crown Castle broke even last year, missing earnings expectations in all four of its top earnings reports. For the second quarter of 2020, Crown Castle missed analyst estimates by $ 0.09 and reported earnings per share (EPS) of $ 0.41. In the third quarter of 2020, CCI’s earnings fell to $ 0.38 per share, falling short of expectations by $ 0.12. For the fourth quarter of 2020, Crown Castle posted another drop in earnings to $ 0.34 per share, missing estimates by $ 0.29. For the first quarter of 2021, Crown Castle reported earnings per share of $ 0.28, falling short of expectations by $ 0.25.
The CCI is up about 17% year over year and is up 37% from its low of $ 146.15 in early March. Additionally, Crown Castle stock has grown 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 right now. CCI trades at an extremely high price-to-earnings-ratio of 95.86 and has an inflated price-to-earnings-ratio of 69.93. With a market capitalization of 85 billion US dollars and a business model that ensures long-term dependency for a good part of the country, it can be said that Crown Castle is one of the few companies that are “too big to fail”. Because of this, CCI can get away with just $ 254 million on its balance sheet and a whopping $ 26 billion in total debt.
That being said, CCI currently offers affordable premiums. The Schaeffer’s Volatility Index (SVI) of 17% is in the lower 7th percentile of the values in its annual range. This means option players are now pricing in low volatility expectations for the stock.