By Rob Otman
American Tower (NYSE: AMT) is a large cap company that operates within the REIT industry. Its market cap is $60 billion today and the total one-year return is 27.68% for shareholders.
American Tower stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
✓ Earnings-per-Share (EPS) Growth: American Tower reported a recent EPS growth rate of 25%. That’s above the REIT industry average of 3.52%. That’s a great sign. American Tower’s earnings growth is outpacing competitors.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the REIT industry is 57.12. And American Tower’s ratio comes in at 49.81. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for American Tower stock is 233.38%. That’s above the REIT industry average of 101.18%. That’s not a good sign.
✗ Free Cash Flow per Share Growth: American Tower has decreased its FCF per share relative to its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✗ Profit Margins: The profit margin of American Tower comes in at 18.88% today. And generally, the higher, the better. We also like to see this ratio above competitors. American Tower’s profit margin is below the REIT average of 56.68%. So that’s a negative indicator for investors.
✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for American Tower is 22.97% and that’s above its industry average ROE of 11.17%.
American Tower stock passes three of our six key metrics today. That’s why our Investment U Stock Grader gives it a Hold.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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