SBA Communications Corp Stock Hold Recommendation Reiterated (SBAC)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- SBA Communications (Nasdaq: SBAC) has been reiterated by TheStreet Ratings as a hold with a ratings score of C. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet.

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Highlights from the ratings report include:
  • SBAC's very impressive revenue growth greatly exceeded the industry average of 1.8%. Since the same quarter one year prior, revenues leaped by 62.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 54.71% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • SBA COMMUNICATIONS CORP has improved earnings per share by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SBA COMMUNICATIONS CORP reported poor results of -$1.50 versus -$1.14 in the prior year. This year, the market expects an improvement in earnings (-$0.43 versus -$1.50).
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, SBA COMMUNICATIONS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The debt-to-equity ratio is very high at 7.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.

SBA Communications Corporation owns and operates wireless communications towers in the United States, Canada, Costa Rica, El Salvador, Guatemala, Nicaragua, Panama, and Brazil. SBA has a market cap of $10.3 billion and is part of the services sector and diversified services industry. Shares are up 13.7% year to date as of the close of trading on Wednesday.

You can view the full SBA Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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