Buy Radius: The Highest Growth And Lowest Risk In Communications Infrastructure

Kevin Egan profile picture
Kevin Egan
97 Followers

Summary

  • RADI's small size ($1.4bn market cap) puts RADI in a position to pursue almost perpetual growth in a fragmented market (RADI owns 6.2k sites vs. >5mn sites worldwide).
  • I estimate that RADI's cash earnings will grow by a CAGR of 17.3% over the next five as mobile data consumption is expected to grow 20-30% annually through 2026.
  • RADI's ground lease equity carries the lowest risk in the communications capital stack and has WA rent escalators that are nearly double that of traditional net lease REITs.
  • As the US is experiencing the highest inflation level of the last 40 years, 78% of RADI's rental cash flows are protected by floating leases that are based on CPI or a similar inflation metric.
  • Given strong industry tailwinds and high barriers to replicate RADI's strategy, RADI's current 19% discount to its intrinsic value provides a low risk point of entry.

Aerial view of 5G telecommunication tower

xijian/E+ via Getty Images

Investment Recommendation

I recommend a Buy rating for Radius Global Infrastructure (NASDAQ:RADI) with a price target of $17, representing a 14.5% total return over the next twelve months. RADI is a growth story that I estimate will be

Bull Bear

Source: Analyst estimates.

Risk Capital Stack

Source: Public company filings.

Telecom Capital Stack

Source: Public company filings.

FX Exposure

Source: Public company filings.

Tenant Concentration

Source: Public company filings.

NTM NOI Calc

Source: Analyst estimates.

External Accretion

Source: Google Finance, Analyst estimates.

Dilution Table

Source: Public company filings.

Management Team

Source: Public company filings.

DCF

Source: Google Finance, Analyst estimates.

LBO

Source: Google Finance, Analyst estimates.

Multiple Comps

Source: Public company filings, Analyst estimates.

Income Statement

Source: Public company filings, Analyst estimates.

NAV

Source: Public company filings, Analyst estimates.

NAV Growth

Source: Analyst estimates.

Bull Bear

Source: Analyst estimates.

This article was written by

Kevin Egan profile picture
97 Followers
Five years of experience in sell side research at Goldman Sachs and Morgan Stanley covering Real Estate equities. CFA charterholder, Chartered Alternative Investment Analyst (CAIA), Certified Public Accountant (CPA) in the state of New York, and CFA Institute Certificate in ESG Investing.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Recommended For You

Comments (11)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.