Water-Logged And Getting Wetter: Crown Castle International (CCI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Crown Castle International ( CCI) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Crown Castle International as such a stock due to the following factors:

  • CCI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $133.6 million.
  • CCI has traded 1.4 million shares today.
  • CCI traded in a range 206.5% of the normal price range with a price range of $2.13.
  • CCI traded below its daily resistance level (quality: 62 days, meaning that the stock is crossing a resistance level set by the last 62 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on CCI:

Crown Castle International Corp., together with is subsidiaries, owns, operates, and leases shared wireless infrastructure primarily in the United States, Puerto Rico, and Australia. CCI has a PE ratio of 235.0. Currently there are 10 analysts that rate Crown Castle International a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Crown Castle International has been 2.9 million shares per day over the past 30 days. Crown Castle International has a market cap of $25.1 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.32 and a short float of 2.2% with 3.40 days to cover. Shares are up 4.2% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Crown Castle International as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and premium valuation.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 20.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $278.84 million or 39.33% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 24.82%.
  • CROWN CASTLE INTL CORP has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CROWN CASTLE INTL CORP increased its bottom line by earning $0.64 versus $0.52 in the prior year. For the next year, the market is expecting a contraction of 14.1% in earnings ($0.55 versus $0.64).
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, CROWN CASTLE INTL CORP's return on equity significantly trails that of both the industry average and the S&P 500.

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