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Telecom Stock Roundup: Strong Q1 for Comcast, Charter Communications Disappoints, Mixed Bag for Sprint

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The telecom industry witnessed a pretty unremarkable week with earnings being the sole highlight.

Largest cable MSO (multi service operator and media giant Comcast Corp. (CMCSA - Free Report) and leading wireless tower operator American Tower Corp. (AMT - Free Report) reported impressive results in the first quarter of 2017. Both the company’s earnings and revenues estimates outpaced the Zacks Consensus Estimates. During the reported quarter, Comcast added a net of 429,000 high-speed Internet customers, 42,000 video customers but lost 5,000 voice customers.

On the other hand, second largest cable MSO Charter Communications Inc. (CHTR - Free Report) posted disappointing financial results in first-quarter 2017, wherein both the top line and bottom line lagged the Zacks Consensus Estimate. In the reported quarter, the company gained 428,000 high-speed Internet and 37,000 voice customers but lost 100,000 video customers in the Residential segment. Charter Communications also added 11,000 video customers, 30,000 high-speed Internet and 31,000 voice customers for the Business segment.

Satellite TV operator DISH Network Corp. declared mixed financial results in the first quarter of 2017 wherein the bottom line surpassed the Zacks Consensus Estimate while the top line lagged. The company lost a net 143,000 pay-TV subscribers and 25,000 high-speed broadband subscribers in the reported quarter.

Meanwhile, national telecom operator Sprint Corp. (S - Free Report) alsoreported mixed financial results for the fourth quarter of fiscal 2016. Net loss was wider than the Zacks Consensus Estimate while total revenue was well above the mark. In the reported quarter, Sprint lost 118,000 postpaid subscribers but gained 125,000 wholesale and 180,000 prepaid customers. Sprint currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Regional wireline telecom operator Frontier Communications Corp. reported mixed financial results in the first quarter of 2017. The company’s adjusted net loss was wider than the Zacks Consensus Estimate while revenues surpassed the mark. As of Mar 31, 2017, the number of residential customers was 4,736,000. Moreover, the company had 4,164,000 high-speed broadband subscribers and 1,065,000 video customers.

Outside the U.S., Taiwanese telecom behemoth Chunghwa Telecom Co. Ltd. (CHT - Free Report) posted mixed first-quarter 2017 financial numbers. While net earnings fell year-over-year, revenues grew.

Read the last Telecom Stock Roundup for Apr 27, 2017.

Recap of the Week’s Most Important Stories

1.    GAAP net income of Comcast in the first quarter of 2017 came in at $2,566 million or 53 cents per share compared with $2,134 million or 43 cents in the prior-year quarter. Quarterly earnings per share of 53 cents outpaced the Zacks Consensus Estimate of 44 cents. Quarterly total revenue was $20,463 million, up 8.9% year over year and ahead of the Zacks Consensus Estimate of $20,113 million. (Read more: Comcast Q1 Earnings and Revenues Surpass Estimates)

2.    Quarterly net loss of Sprint was $283 million or 7 cents per share compared with a net loss of $554 million or 14 cent per share in the year-ago quarter. However, fourth-quarter net loss per share of 7 cents was wider than the Zacks Consensus Estimate of a loss of 4 cents. Total revenue came in at $8,539 million, up 5.8% year over year and substantially above the Zacks Consensus Estimate of $7,966 million. (Read more:  Sprint Incurs Wider-than-Expected Q4 Loss, Revenues Top)

3.    Charter Communications’ GAAP net income in the reported quarter was $155 million compared with net income of $179 million in the year-ago quarter (calculated on a pro forma basis). Quarterly earnings per share of 57 cents per share were below the Zacks Consensus Estimate of 99 cents. First-quarter 2017 total revenue of $10,164 million increased 4.3% year over year but missed the Zacks Consensus Estimate of $10,253.4 million. (Read more:  Charter Communications Disappoints in Q1 Earnings)

4.    Quarterly net income of DISH Network came in at $375.7 million or 76 cents per share compared with a net income of $399.9 million or 86 cents in the year-ago quarter. First-quarter earnings per share of 76 cents outpaced the Zacks Consensus Estimate of 67 cents. Total revenue in the reported quarter was approximately $3,680.4 million, down 3.8% year over year and lagging the Zacks Consensus Estimate of $3,749 million. (Read more:  DISH Network Q1 Earnings Top Estimates, Revenues Miss)

5.    On a GAAP basis, net loss of Frontier Communications in the reported quarter was $129 million or 11 cents per share compared with a net loss of $240 million or 21 cents per share in the prior-year quarter. However, quarterly adjusted loss per share was 8 cents, worse than the Zacks Consensus Estimate of a loss of 5 cents. Total revenue increased a whopping 73.9% year over year to $2,356 million, beating the Zacks Consensus Estimate of $2343.4 million. (Read more: Frontier Communications Q1 Loss Wider than Expected)

Price Performance

The following table shows the price movement of major telecom players over the past week and last six months.

Company

Last Week

Last 6 Months

VZ

-2.86%

-1.98%

T

-5.49%

5.21%

S

-11.80%

26.75%

TMUS

-3.61%

32.42%

CHTR

-6.39%

29.68%

TEF

0.54%

15.20%

AMX

-0.94%

22.29%

CMCSA

-2.80%

27.07%

DISH

-5.67%

9.92%

In the last five trading sessions, share price movement of most of major telecom stocks was negative barring Telefonica. Sprint (11.80%), Charter Communications (6.39%), DISH Network (5.67%), AT&T (5.49%) and T-Mobile US (3.61%) lost substantially.

In contrast, in the last six months, the price performances of the major telecom stocks were positive barring Verizon. Among the stocks that gained substantially are T-Mobile US (32.42%), Charter Communications (29.68%), Comcast (27.07%), Sprint (26.75%), America Movil (22.29%) and Telefonica (15.20%).

What’s Next in the Telecom Space?

We expect a busy week to continue for the telecom sector as several sector participants like Telephone and Data Systems, United States Cellular, Windstream Holdings, Cincinnati Bell, TELUS and Telefonica will release their quarterly financial results. The market will closely evaluate these results in order to assess industry dynamics and future growth prospects.

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