Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

American Tower Corp (AMT): A Nontraditional REIT Capitalizing on One of the Fastest Growing Industries in the World

Page 1 of 2

The owner and operator of the largest independent portfolio of wireless communications and broadcast towers in North America,  American Tower Corp (NYSE:AMT), is only up 0.74% year to date, a far cry from the 15.35% return offered by the Dow Jones Industrial Average.

American Tower Corp (NYSE:AMT)

As of September 2012, the company operated a tower portfolio of roughly 50,699 sites in the United States, Mexico, Brazil, Chile, Columbia, India, Peru, Ghana, and South Africa. The company’s core business appears financially efficient, with a TTM profit margin of 19.70%. Based on market capitalization, the company is valued at $30.78 billion.

With American Tower trading within a minor rally of all-time highs, is this nontraditional REIT a strong buy for a long-term portfolio, or should investors stay away from this company?


–Predictable & Stable Business Model: The company signs service providers to long-term leases, usually five to 10 years, that contain annual lease rate escalations of 3% to 5%.  As a result of the guarantee of a consistent revenue stream for a decade to come, American Tower Corp (NYSE:AMT)’s business model is extremely predictable and stable,  allowing the company to pay out a dividend yielding 1.39%.

–Institutional Vote of Confidence: 92% of shares outstanding are held by institutional investors, representing over $25 billion in investment and displaying the confidence some of the largest investors in the world have in the company and its future.

–Explosive Revenue Growth: In 2002, American Tower reported revenue of $788 million; in 2011, the company announced revenue of $2.44 billion, representing year over year annual growth of 13.51%, a strong trend that should continue into the future with projections placing 2016 revenue at $3.83 billion. This growth has been a result of rapid expansion and aggressive reinvestment by the company in new properties.

–Cash Flow Position: In 2010, American Tower Corp (NYSE:AMT) generated $834 million in cash flow, exemplifying the financial strength of the company.

–Margin Expansion: Over the past decade, the company’s profit margin has expanded from extreme negative territory in 2004 to the current level around 20%.


–Net Debt: The company’s $382 million in cash and cash equivalents is outweighed by its $7.35 billion debt load, resulting in a net debt of $6.96 billion, 23.88% of total market capitalization, a minor financial weakness of the company.

–High Valuation: At the moment, American Tower carries a price to earnings ratio of 52.97, a price to book ratio of 8.71, and a price to sales ratio of 10.83; all of which indicate a company trading with a high valuation.


–Increased Data Usage: Global data usage has skyrocketed over the past few years, with further accelerated growth projected, and with this increased data usage comes opportunity for American Tower Corp (NYSE:AMT) as increasing data usage requires service providers to add capacity to cell sites, as well as expand their networks, both of which benefit the company.

–India: India has been a region of rapid expansion for the company, with American Tower entering into a build to suit agreement in India; the initial plan is for 200 towers for $15 million, with the company completing its first 52 towers during the 2008 third quarter and later purchasing XCEL Telecom Private Limited in May 2009. Just after the end of the 2008 third quarter, the company purchased 326 tower sites in India and in August 2010 closed a deal to acquire Essar Telecom, with 4,629 towers in India. Further growth in India is projected and provides incredible opportunity for the company.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!