Financial Analysis: Towerstream (TWER) versus SBA Communications (SBAC)

Towerstream (OTCMKTS: TWER) and SBA Communications (NASDAQ:SBAC) are both computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Institutional & Insider Ownership

96.2% of SBA Communications shares are owned by institutional investors. 6.4% of Towerstream shares are owned by company insiders. Comparatively, 2.4% of SBA Communications shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Towerstream and SBA Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Towerstream -53.20% N/A -51.49%
SBA Communications 5.95% -4.71% 1.31%

Analyst Ratings

This is a summary of current recommendations for Towerstream and SBA Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Towerstream 0 0 0 0 N/A
SBA Communications 0 4 10 0 2.71

SBA Communications has a consensus target price of $158.23, indicating a potential downside of 5.03%. Given SBA Communications’ higher possible upside, analysts plainly believe SBA Communications is more favorable than Towerstream.

Volatility and Risk

Towerstream has a beta of 0.11, indicating that its stock price is 89% less volatile than the S&P 500. Comparatively, SBA Communications has a beta of 0.77, indicating that its stock price is 23% less volatile than the S&P 500.

Earnings and Valuation

This table compares Towerstream and SBA Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Towerstream $26.90 million 0.06 -$20.43 million N/A N/A
SBA Communications $1.63 billion 11.99 $76.23 million $0.84 198.35

SBA Communications has higher revenue and earnings than Towerstream.

Summary

SBA Communications beats Towerstream on 9 of the 11 factors compared between the two stocks.

About Towerstream

Towerstream Corporation is a provider of fixed wireless services to businesses in over 10 urban markets across the United States. The Company operates through Fixed Wireless Services (Fixed Wireless) segment. Its fixed wireless service supports bandwidth on demand, wireless redundancy, virtual private networks, disaster recovery, bundled data and video services. Towerstream installs equipment on the rooftops of the buildings in which the Fixed Wireless segment customers operate and refer to these as Customer Locations. This equipment includes receivers and antennas, and a wireless connection is established between the Customer Location to one or more of its points of presence (PoPs). It provides fixed wireless broadband services to commercial customers and delivers access over a Wireless network transmitting over both regulated and unregulated radio spectrum. It provides services to business customers in various locations, including New York City, Boston, Chicago and Houston.

About SBA Communications

SBA Communications Corporation is an independent owner and operator of wireless communications tower structures, rooftops and other structures that support antennas used for wireless communications. The Company’s operating segments include site leasing and site development. The site leasing business includes segments, domestic site leasing and international site leasing. The Company’s primary business line is its site leasing business. In its site leasing business, the Company leases antenna space to wireless service providers on towers that it owns or operates, and manages rooftop and tower sites for property owners under various contractual arrangements. The Company owns approximately 25,460 towers. It also manages or leases approximately 5,500 actual or potential towers. The Company’s other business line is its site development business, through which it assists wireless service providers in developing and maintaining their own wireless service networks.

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