How to Play Crown Castle Stock Following 15.8% Decline in 3 Months?

Crown Castle Inc. CCI has grabbed headlines in recent months. According to market sources, the buyout firm TPG is said to be in advanced talks about buying the fiber unit of the tower operator for about $8 billion. While this was revealed in December, any further development on this front is yet to come up. Also, CCI has not yet released its full-quarter and full-year 2024 earnings.This REIT, which specializes in owning and leasing communication infrastructure across the United States, has been luring its investors with a solid dividend yield, which currently stands at 6.97%. However, this sale of fiber business, if materialized, could lead to a significant reduction in the company's dividend. This has made investors skeptical, and CCI shares have declined 15.8% in the past three months, underperforming the Zacks REIT and Equity Trust - Other industry and the S&P 500 composite.Nevertheless, before hastily deciding to remove this stock from your portfolio or rushing to buy after the dip, it’s important to assess whether the current concerns could significantly impact the company’s performance and evaluate whether this REIT has strong growth potential for the long term.Three-Month Price PerformanceImage Source: Zacks Investment ResearchWhat Is Brewing at Crown Castle?Crown Castle has been actively exploring strategic options for its fiber business in 2024 as part of its efforts to optimize its asset portfolio and enhance shareholder value. In April 2024, Crown Castle disclosed that it was in discussions with multiple parties regarding the potential sale of its fiber and small cell businesses. This announcement followed internal deliberations and external pressures concerning the performance and strategic fit of these assets within the company's overall operations.By October 2024, a Reuters report indicated that Zayo Group, backed by EQT, and the private equity firm TPG were leading contenders in the bid to acquire Crown Castle's fiber and wireless assets in a deal valued at close to $10 billion. Finally, in December 2024, news from Bloomberg revealed that TPG had entered advanced negotiations to purchase Crown Castle's fiber unit for approximately $8 billion.What to Expect for Crown Castle Now?Crown Castle boasts a vast portfolio, including more than 40,000 cell towers and approximately 90,000 route miles of fiber supporting small cells and fiber solutions across major U.S. markets. This extensive infrastructure positions the company to capitalize on the growing demand for wireless connectivity. The potential divestiture reflects Crown Castle's intent to streamline its focus on its core tower operations. While the move can be a strategic fit for the long term, this sale could lead to a significant reduction in the company's dividend amid an anticipated decrease in adjusted funds from operations (AFFO) per share.Crown Castle also has a substantially leveraged balance sheet. The company’s debt and other long-term obligations aggregated $23.45 billion as of Sept. 30, 2024. In a still high-interest-rate environment, this would lead to elevated interest expenses.Nevertheless, Crown Castle's focus on essential communication infrastructure aligns with the increasing demand for wireless connectivity and data transmission, positioning it well for future growth.CCI’s Estimate Revisions and ValuationEven the estimate revision trends echo similar sentiments. While the Zacks Consensus Estimate for 2024 AFFO per share has remained unrevised over the past two months, the same for 2025 has been revised southward over the same time frame.Image Source: Zacks Investment ResearchSee the Zacks Earnings Calendar to stay ahead of market-making news.Crown Castle stock is trading at a forward 12-month price-to-FFO of 12.96X, below the REIT industry average of 15.15X and lower than its one-year median of 15.90X. Although Crown Castle stock is currently trading at a discount compared to its industry peers, including American Tower Corporation AMT and SBA Communications Corporation SBAC, this valuation disparity might not be as favorable as it seems.Forward 12 Month Price-to-FFO (P/FFO) RatioImage Source: Zacks Investment ResearchFinal Take on Crown CastleCrown Castle stock is currently priced lower than its industry peers, but it may be prudent to wait for further clarity on the fiber business sale before making any buy or sell decisions. As the situation continues to evolve, the coming days could shed light on the full scope of challenges facing the REIT. For current investors, holding on to shares may be a sensible approach, given the company's strong dividend yield and presence in a desirable real estate sector.At present, Crown Castle carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.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.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want 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 SBA Communications Corporation (SBAC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks