Is it Wise to Retain Crown Castle Stock in Your Portfolio for Now?

Crown Castle’s CCI efforts to expand its tower business bode well amid the growing demand for wireless connectivity. A healthy balance sheet position will likely support its growth endeavors. However, customer concentration and consolidation in the wireless industry raise concerns. Substantial debt burden adds to its woes.What’s Aiding Crown Castle Stock?The wireless data consumption is expected to increase considerably over the next several years, driven by the advent of next-generation technologies, including edge computing functionality, autonomous vehicle networks and the Internet-of-Things, as well as the rampant usage of network-intensive applications for video conferencing, and cloud services and hybrid-working scenarios.Given Crown Castle’s unmatched portfolio of more than 40,000 towers in each of the top 100 basic trading areas of the United States (as of the first quarter of 2025), it remains well-positioned to capitalize on this upbeat trend. Management expects a solid, stable level of demand for its tower assets in 2025.CCI’s strong internally generated cash flow, supported by its tower segment, is impressive. The company has long-term tower lease agreements with top U.S. carriers, which contribute to recurring site rental cash flows over the long term. Moreover, a strong and creditworthy tenant base adds resiliency to its business.CCI has sufficient liquidity and a decent balance sheet position. The company exited the first quarter of 2025 with cash and cash equivalents of $60 million. As of March 31, 2025, it had $7 billion of undrawn funds available under its senior unsecured revolving credit facility and a net debt-to-annualized adjusted EBITDA of 5.9x. Based on preliminary analysis, the company believes that its enhanced free cash flow profile, as a pure-play U.S. Tower business, will enable it to maintain an investment-grade credit rating with a target leverage between 6 and 6.5 times EBITDA.Over the past six months, shares of this tower REIT, currently carrying a Zacks Rank #3 (Hold), have rallied 18.3% compared with the industry’s 6% increase. Image Source: Zacks Investment Research What’s Hurting Crown Castle Stock?Customer concentration is very high for Crown Castle. As of March 31, 2025, around three-fourths of the company’s site rental revenues were derived from T-Mobile (40%), AT&T (27%) and Verizon (21%). Loss of any of these customers or consolidation among them will have a significant impact on the company’s top line.Crown Castle has a substantially leveraged balance sheet and a significant amount of debt relative to its cash flows. The company’s debt and other long-term obligations aggregated $24.38 billion as of March 31, 2025.Solid dividend payouts remain the biggest attraction for REIT investors. However, it has increased its dividend only three times in the last five years, which remains a concern. In May 2025, to increase free cash flow generation and enhance financial stability following the sale of the Fiber segment, the company announced a 32.1% reduction in its quarterly cash dividend payment. Hence, any significant turnaround in dividend payment is likely to remain elusive in the near term.Stocks to ConsiderSome better-ranked stocks from the broader REIT sector include American Tower AMT and Medical Properties Trust MPW, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for AMT’s 2025 FFO per share has moved 2 cents northward to $10.53 over the past two months.The Zacks Consensus Estimate for MPW’s 2025 FFO per share has moved a cent northward to 57 cents over the past two months.Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report American Tower Corporation (AMT): Free Stock Analysis Report Crown Castle Inc. (CCI): Free Stock Analysis Report Medical Properties Trust, Inc. (MPW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks