American Tower CorporationAMTNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $248.50 per share(market-calibrated)

+30.4%

Upside to Fair Value

Current

$190.51

Pure Model

$259.93

Fair Value

$248.50

Bull Case

$351.40

Bear Case

$186.75

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

1.03%

Calibrated Growth

2.13%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $259.93.

What's Driving This Ratingfor AMT

↓

CapEx normalizing toward maintenance

Historical CapEx is 15.63% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$2.1B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 37.98% — below the sector mature average of 45.85%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $6.1B (37.98% margin).

→

Moderate revenue growth

Analyst consensus projects 1.42% revenue growth, fading to 2.50% by Year 10. Revenue reaches $16.2B (vs $10.6B today).

🎯

Market pricing in lower growth than model

The market implies only 1.03% perpetual growth — 147bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 87.27% indicates efficient cash generation. FCF reaches $8.8B by Year 10 (54.36% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.91

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.58%

Cost of Debt

Pre-tax Cost of Debt2.59%

Tax Rate13.66%

After-tax Cost of Debt2.23%

Equity Weight (E/V)66.53%

Debt Weight (D/V)33.47%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (66.53% × 8.58%) + (33.47% × 2.23%)

= 6.46%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$10.8B	$11.8B	$13.4B	$14.7B	$16.2B
EBIT	$4.1B	$4.5B	$5.1B	$5.6B	$6.1B
Tax	$560M	$614M	$693M	$763M	$839M
NOPAT	$3.5B	$3.9B	$4.4B	$4.8B	$5.3B
+ Depreciation	$2.6B	$2.9B	$3.2B	$3.6B	$3.9B
- Capex	$1.7B	$1.5B	$1.3B	$1.0B	$404M
- Δ NWC	$15M	$68M	$75M	$65M	$39M
Free Cash Flow	$4.5B	$5.2B	$6.2B	$7.3B	$8.8B
Discount Factor	0.939	0.829	0.731	0.645	0.535
Present Value	$4.2B	$4.3B	$4.6B	$4.7B	$4.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$8.8B

Terminal Growth Rate2.50%

WACC6.46%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$227.7B

PV of Terminal Value$121.8B

Exit Multiple Method

Year 10 EBITDA$10.1B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$221.6B

PV of Terminal Value$118.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$45.3B

PV of Terminal Value$121.8B

Enterprise Value$167.1B

(-) Net Debt$43.5B

Equity Value$123.6B

Shares Outstanding469M

Price per Share$263.41

Exit Multiple Method

PV of Projected FCFs$45.3B

PV of Terminal Value$118.5B

Enterprise Value$163.8B

(-) Net Debt$43.5B

Equity Value$120.3B

Shares Outstanding469M

Price per Share$256.46

Pure Model Fair Value

$259.93

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
4.46%	$375.45	$418.99	$475.81	$452.84	$430.95
5.46%	$289.19	$310.42	$338.82	$378.78	$430.95
6.46%	$232.74	$244.81	$259.93	$279.43	$305.52
7.46%	$191.71	$199.25	$208.31	$219.41	$233.31
8.46%	$159.90	$164.92	$170.79	$177.73	$186.06

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$186.75

-2.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.13

Base Case

$259.93

36.4% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.91

Bull Case

$351.40

84.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.77

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth1.42%

Year 3 Revenue Growth6.09%

Year 5 Revenue Growth5.98%

Year 7 Revenue Growth4.59%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin37.98%

Terminal EBIT Margin45.85%

Tax Rate13.66%

Historical Capex / Rev15.63%

Terminal Capex / Rev2.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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