Robust Wireless Growth Can Take Crown Castle Higher

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Dec 21, 2014

Crown Castle International (CCI, Financial) recently released strong results. The company seems well positioned for better times ahead as it is undertaking various steps to drive its growth. More importantly, Crown Castle is seeing robust momentum in the wireless infrastructure business. Let's take a closer look at the company and see why it can be a good investment going forward.

Wireless prospects are strong

Crown Castle is counting on the wireless business and it is remains well on the track to capture the advantages that it is seeing from wireless infrastructure all across the U.S. The demands are increasing and to be competent with its peers and to fulfil the growing demands, Crown Castle is upgrading its networks along the potential regions.

Moving on, Crown Castle already shares the top position in the wireless tower market. It also has a broad customer base with some of the top companies such as AT&T, Verizon Wireless etc. These are expected to contribute about 85% of the total revenue of Crown Castle. With the positive growth in the wireless carriers across the U.S this customer base is expected to contribute well to Crown Castle’s growth momentum.

The company is seeing new customer addition as well. With this the company is pleased to see new lease relationship building and also the renewal of existing lease agreements are also contributing well to the growth strategy of the company. Crown Castle expects these lease programs to further support the strong portfolio of its tower.

In addition, Crown Castle is also seeing solid growth in small cell networks. The company is expecting this growth to be a solid growth driver for the company in future. Another favourable factor for Crown Castle is that the LTE platform is continually gaining traction in the market, there will be need of more towers in the future, giving good growth opportunities to Crown Castle in future. Since the traffic is growing at a greater pace, the network providers are upgrading backhaul for smartphones.

Also, as of now Crown Castle has approximately 14,000 nodes that strengthen its position that should drive its growth from increasing macro trends in the region. Moreover, it has the best national United States carriers that makes broadens its growth prospects. Also, its high-quality of assets should support its growth in the future and expand its margins, while creating value for shareholders.

Conclusion

Moving on the fundamentals, the stock is very expensive with a trailing P/E of 146.98. It’s forward P/E of 17.37 shows steady earnings growth in the near term. In fact in the next five years its earnings are growing at a CAGR of 10.00% which is lower than the industry average of 11.74%. All these facts shows that there is still much time left for Crown Castle to gain market share. So until that the investors should stay away from the stock.