SBA Communications Corporation (NASDAQ:SBAC): Immense Growth Potential?

On 30 June 2019, SBA Communications Corporation (NASDAQ:SBAC) released its earnings update. Generally, it seems that analyst forecasts are fairly optimistic, as a 46% increase in profits is expected in the upcoming year, though this is relatively lower than the previous 5-year average earnings growth of 51%. By 2020, we can expect SBA Communications’s bottom line to reach US$69m, a jump from the current trailing-twelve-month of US$47m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for SBA Communications

Exciting times ahead?

The longer term view from the 14 analysts covering SBAC is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NasdaqGS:SBAC Past and Future Earnings, August 15th 2019
NasdaqGS:SBAC Past and Future Earnings, August 15th 2019

From the current net income level of US$47m and the final forecast of US$116m by 2022, the annual rate of growth for SBAC’s earnings is 26%. EPS reaches $2.88 in the final year of forecast compared to the current $0.41 EPS today. With a current profit margin of 2.5%, this movement will result in a margin of 5.3% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For SBA Communications, I’ve put together three fundamental factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is SBA Communications worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SBA Communications is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SBA Communications? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.