Crown Castle International Corp.: Bill & Melinda Gates’s Favorite New Tech Stock Up 34% This Year

Crown Castle International Corp. Bill Gates's Favorite Tech Stock
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CCI Stock Up 16% Since Reporting Q2 Results

Crown Castle International Corp. (NYSE:CCI) shares have been having a great run in 2019, advancing 34.3% year-to-date and 16% since the company reported its second-quarter results in mid-July.

One investor who has done well with CCI stock in 2019 is Bill Gates, co-founder of Microsoft (NASDAQ:MSFT).

Through the Bill and Melinda Gates Foundation, Gates purchased 5.3 million Crown Castle shares. It’s the foundation’s second-largest tech holding next to Microsoft. At the time, those shares were valued at about $593.7 million. (Source: “Form 13-F,” U.S. Securities and Exchange Commission, last accessed August 22, 2019.)

The foundation’s latest filing shows that it still held those Crown Castle shares, except by then the shares were worth $695.1 million. (Source: “Form 13-F, “U.S. Securities and Exchange Commission, August 14, 2019.)

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What has fueled those market-thumping results? Crown Castle has been reporting strong financial results and the company has raised its full-year guidance.

Despite Crown Castle stock’s strong gains, broader industry turmoil, and fears of a stock market correction, the Bill and Melinda Gates Foundation continues to have faith in the future of Crown Castle.

Crown Castle International Corp. Overview

Crown Castle is a real estate investment trust (REIT) that owns, operates, and leases out more than 40,000 cell towers, 65,000 small cell nodes (essential for 5G), and 75,000 route miles of fiber—in every major U.S. market.  (Source: “Our Infrastructure,” Crown Castle International Corp., last accessed August 22, 2019.)

As more and more wireless technologies come online, CCI’s towers, small cells, and fiber will make these ground-breaking technologies a reality.

The company’s shared economic model and infrastructure is able to support numerous customers at the same time. The company’s clients include wireless carriers, technology companies, broadband providers, and municipalities.

CCI Stock Information
Market Cap $61.7 Billion
52-Week Change 31%
52-Week High $147.88
52-Week Low $103.21
Shares Outstanding 415.7 Million
Float 413.7 Million
50-Day Moving Average $135.55
200-Day Moving Average $128.44

(Source: “Crown Castle International Corp. (REIT) (CCI),” Yahoo! Finance, last accessed August 22, 2019.)

Crown Castle stock has been having a terrific year, rising approximately 35% since the start of 2019 and 16.5% since the company reported strong second-quarter results in mid-July.


Chart courtesy of StockCharts.com

In light of the trade war with China and concerns about the strength of the U.S. economy, there are concerns about whether CCI stock can maintain its feverish trajectory. In the short term, it appears the answer is “yes.” The company raising its full-year guidance has been helping to juice its stock price.

Crown Castle stock may experience a short-term pullback on the heels of profit-taking, but it has a long history of rebounding quickly.

Terrific Second-Quarter Results

On July 17, Crown Castle announced its financial results for the second quarter ended June 30.

“We delivered terrific results in the second quarter that exceeded our expectations and reflect the strong demand for our unmatched portfolio of towers, small cells and fiber assets,” said Jay Brown, CEO.  (Source: “Crown Castle Reports Second Quarter 2019 Results and Raises Outlook for Full Year 2019,” Crown Castle International Corp., July 17, 2019.)

Metric Q2 2019 Q2 2018 Year-Over-Year Change
Site Rental Revenue $1.23 Billion $1.16 Billion +6%
Net Income $246.0 Million $180.0 Million +37%
Net Income Per Diluted Share $0.52 $0.36 +44%
Adjusted Earnings Before Interest, Tax, Depreciation, & Amortization (EBITDA) $857.0 Million $769.0 Million +11%
Adjusted Funds From Operations (AFFO) $619.0 Million $546.0 Million +13%
AFFO Per Share $1.48 $1.31 +13%

(Source: Ibid)

AFFO is a financial performance measure used by REITs that is similar to cash flow per share. It’s a non-generally accepted accounting principles (GAAP) measure that excludes gains or losses from the sale of property and adds back non-cash charges such as depreciation.

Checking the AFFO is a good way to get a handle of a REIT’s profitability.

2019 Guidance

Ongoing momentum and strong financial results have allowed Crown Castle to increase its full-year 2019 outlook.

“We remain excited about our ability to continue to generate attractive growth and returns for our shareholders as we remain focused on delivering dividend per share growth of 7% to 8% per year,” said Brown.

Metric 2019 Outlook

Year-Over-Year Change

Site Rental Revenue $5.0 Billion +5.0%
Net Income $926.0 Million +38.0%
Adjusted EBITDA $3.4 Billion +9.0%
AFFO $2.5 Billion +9.0%
AFFO Per Share $5.94 +8.0%

(Source: Ibid)

Analyst Take

Communications companies have 5G technology, but Crown Castle International Corp. is the gatekeeper.

In 2019, 5G phones have been launching around the world. To make the technology usable, providers need to rent CCI’s small cell nodes. The company will be deploying 10,000 of them this year, a 30% increase from 2018. The increased tower activity is expected to increase the company’s AFFO per share.

All of this should help Crown Castle stock generate compelling returns for shareholders through dividend growth and capital appreciation—over both the short and long term.