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Will Modest Revenue Growth Buoy Q2 Earnings of AT&T (T)?
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AT&T Inc. (T - Free Report) is scheduled to report second-quarter 2023 results on Jul 26, before the opening bell. In the last reported quarter, the adjusted earnings beat the Zacks Consensus Estimate by 2 cents. The company is expected to witness a top-line improvement year over year on healthy wireless traction, driven by steady investments for 5G expansion and fiber broadband infrastructure development.
Factors at Play
During the second quarter, AT&T continued to expand its 5G network coverage in rural and urban areas nationwide. It is heavily investing in enhancing network capacity and improving the resiliency of the existing infrastructure. AT&T expects to deploy mid-band spectrum to 200 million users by year-end 2023 and reach more than 30 million customer and business locations with fiber by the end of 2025. The extensive fiber footprint is likely to minimize its maintenance and repair costs while generating higher ARPU. This is likely to get reflected in the second quarter results.
In the second quarter, AT&T collaborated with Cisco to launch innovative solutions that enhance connectivity and advance the calling landscape for hybrid workforces. With the new offerings, businesses of any size can offer employees a simple, secure, consistent experience to thrive in any setting. Leveraging embedded security and analytics, enterprises can connect a user or device to any application in their multi-cloud for end-to-end visibility.
AT&T also collaborated with Trinity Cyber, Inc. to deliver an innovative, commercially managed cybersecurity solution to the U.S. Air Force. The Secure Internet Gateway is expected to greatly enhance cybersecurity protections and reduce risks for Air Force networks. These initiatives are likely to have had a favorable effect on the company’s second-quarter performance.
Our estimate for revenues from the Communications segment is pegged at $29,160.8 million, while that from the Latin America segment is $831.8 million.
However, AT&T is facing stiff competition in the wireless market from other major carriers that are aggressively expanding their networks and improving their offerings. Consumer’s tendency to switch to various streaming services from TV subscriptions is hurting company’s top line. It also has a large debt burden, which dented its competitiveness and limits growth potential. In addition, a challenging macroeconomic environment, inflationary pressures and business uncertainty are forcing consumers to have a conservative approach for higher-tier services. This is likely to have led to top-line contraction.
The Zacks Consensus Estimate for total revenues is pegged at $30,155 million, indicating a rise from $29,643 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 60 cents per share. It had reported earnings of 65 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for AT&T for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.04%, with the former pegged at 61 cents and the latter at 60 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +11.77% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 27.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.56% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 26.
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Will Modest Revenue Growth Buoy Q2 Earnings of AT&T (T)?
AT&T Inc. (T - Free Report) is scheduled to report second-quarter 2023 results on Jul 26, before the opening bell. In the last reported quarter, the adjusted earnings beat the Zacks Consensus Estimate by 2 cents. The company is expected to witness a top-line improvement year over year on healthy wireless traction, driven by steady investments for 5G expansion and fiber broadband infrastructure development.
Factors at Play
During the second quarter, AT&T continued to expand its 5G network coverage in rural and urban areas nationwide. It is heavily investing in enhancing network capacity and improving the resiliency of the existing infrastructure. AT&T expects to deploy mid-band spectrum to 200 million users by year-end 2023 and reach more than 30 million customer and business locations with fiber by the end of 2025. The extensive fiber footprint is likely to minimize its maintenance and repair costs while generating higher ARPU. This is likely to get reflected in the second quarter results.
In the second quarter, AT&T collaborated with Cisco to launch innovative solutions that enhance connectivity and advance the calling landscape for hybrid workforces. With the new offerings, businesses of any size can offer employees a simple, secure, consistent experience to thrive in any setting. Leveraging embedded security and analytics, enterprises can connect a user or device to any application in their multi-cloud for end-to-end visibility.
AT&T also collaborated with Trinity Cyber, Inc. to deliver an innovative, commercially managed cybersecurity solution to the U.S. Air Force. The Secure Internet Gateway is expected to greatly enhance cybersecurity protections and reduce risks for Air Force networks. These initiatives are likely to have had a favorable effect on the company’s second-quarter performance.
Our estimate for revenues from the Communications segment is pegged at $29,160.8 million, while that from the Latin America segment is $831.8 million.
However, AT&T is facing stiff competition in the wireless market from other major carriers that are aggressively expanding their networks and improving their offerings. Consumer’s tendency to switch to various streaming services from TV subscriptions is hurting company’s top line. It also has a large debt burden, which dented its competitiveness and limits growth potential.
In addition, a challenging macroeconomic environment, inflationary pressures and business uncertainty are forcing consumers to have a conservative approach for higher-tier services. This is likely to have led to top-line contraction.
The Zacks Consensus Estimate for total revenues is pegged at $30,155 million, indicating a rise from $29,643 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 60 cents per share. It had reported earnings of 65 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for AT&T for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.04%, with the former pegged at 61 cents and the latter at 60 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AT&T Inc. Price and EPS Surprise
AT&T Inc. price-eps-surprise | AT&T Inc. Quote
Zacks Rank: AT&T has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
Intel Corporation (INTC - Free Report) is set to release quarterly numbers on Jul 27. It has an Earnings ESP of +21.05% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +11.77% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 27.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +6.56% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.