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AT&T vs. Sprint: Which Stock is Poised for Better Earnings?
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U.S. telecom behemoth AT&T Inc (T - Free Report) and U.S. national wireless carrier Sprint Corp (S - Free Report) — two of the four major wireless carriers — are expected to release earnings results on Oct 24. While AT&T will report third-quarter 2017 results, after market close, Sprint is expected to release its second-quarter 2017 results.
Last week, another domestic telecom company — Verizon Communications Inc (VZ - Free Report) — reported mixed financial numbers in third-quarter 2017. The company’s top line beat the Zacks Consensus Estimate, while the bottom line met the same. The company also witnessed significant increase in postpaid wireless subscribers in the quarter under review.
T-Mobile US Inc (TMUS - Free Report) — the nation’s third-largest wireless carrier — will release third-quarter 2017 financial numbers on Oct 23, before the market opens.
An impending merger between Sprint and T-Mobile US could pose a threat to Verizon and AT&T. However, increased threat from the combined entity might compel these companies to innovate its products. We keenly wait to see how this merger changes the scenario of the saturated and intensely competitive national wireless industry.
All the above-mentioned telecommunications stocks are grouped under thebroader Computer and Technology sector (one of the 16 Zacks sectors).
For now, let’s take a look at the fundamentals (both financial and non-financial metrics) of AT&T and Sprint to help investors decide on which stock to choose.
2 Telecom Stocks Poised to Release Earnings
Our quantitative model offers some insight into stocks that are about to report earnings. Per the model, a stock needs to have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, to deliver an earnings beat.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
AT&T
We are bullish about AT&T’s opportunities arising from the postpaid and prepaid wireless subscriber count, per the Zacks Consensus Estimate. The Zacks Consensus Estimate of postpaid wireless subscriber addition for third quarter is 130 million and that of prepaid wireless is 270 million. Improvement in subscriber addition holds promise for AT&T in the to-be-reported quarter.
Per the Zacks Consensus Estimate, postpaid churn (another crucial metric for the wireless industry) is projected to be 0.01% for both the Business Solutions and Consumer Mobility segments. Operating revenues for wireless services is estimated to be around $17,709 million in the to-be reported quarter.
Accordingly, AT&T delivered a positive earnings surprise of 6.76% in the last reported quarter. The company’s bottom line was in line with the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 1.69%.
AT&T has an Earnings ESP of -0.96% because the Most Accurate estimate is at 74 cents while the Zacks Consensus Estimate is pegged at 75 cents.
AT&T has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult. (read more: What's in the Offing for AT&T this Earnings Season?).
Sprint
Sprint has an Earnings ESP of -19.00%. The Most Accurate estimate is at a loss of 3 cents while the Zacks Consensus Estimate is pegged at a loss of 2 cents. The company delivered positive earnings surprises in two of the last four quarters, with an average beat of 129.47%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Per estimates, total operating revenues for wireless segment was $7,732 million, while that of wireline segment grossed $419 million.
Meanwhile, net postpaid wireless subscriber addition for Sprint in the to-be-reported quarter is estimated at around 162 million and that of prepaid is expected to be 103 million. The Zacks Consensus Estimate for postpaid ARPU (average revenue per user) and prepaid ARPU is $46.89 and $37.62, respectively. Moreover, postpaid churn and prepaid churn is estimated to be 0.02% and 0.05%, respectively.
Following the above comparison, let’s get notified with what’s going on in the current/ongoing quarter till date.
Price Performance
Over the past three months, shares of AT&T and Sprint have declined 2.7% and 18.8%, respectively, as against the industry's gain of 0.8%.
Overview of Q3 Earnings So Far
We are in the thick of third-quarter earnings season with results from 87 S&P 500 members, accounting for 24.7% of the index’s total market capitalization (based on the latest Earnings Preview). Total earnings for these companies are up 9.4% from the same period last year on 7.3% higher revenues, with 71.3% beating EPS estimates and 70.1% surpassing revenue estimates.
More than 700 companies are scheduled to release results this week, including 180 S&P 500 members. We can safely conclude that the third-quarter earnings season is off to a solid start.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
AT&T vs. Sprint: Which Stock is Poised for Better Earnings?
U.S. telecom behemoth AT&T Inc (T - Free Report) and U.S. national wireless carrier Sprint Corp (S - Free Report) — two of the four major wireless carriers — are expected to release earnings results on Oct 24. While AT&T will report third-quarter 2017 results, after market close, Sprint is expected to release its second-quarter 2017 results.
Last week, another domestic telecom company — Verizon Communications Inc (VZ - Free Report) — reported mixed financial numbers in third-quarter 2017. The company’s top line beat the Zacks Consensus Estimate, while the bottom line met the same. The company also witnessed significant increase in postpaid wireless subscribers in the quarter under review.
T-Mobile US Inc (TMUS - Free Report) — the nation’s third-largest wireless carrier — will release third-quarter 2017 financial numbers on Oct 23, before the market opens.
An impending merger between Sprint and T-Mobile US could pose a threat to Verizon and AT&T. However, increased threat from the combined entity might compel these companies to innovate its products. We keenly wait to see how this merger changes the scenario of the saturated and intensely competitive national wireless industry.
All the above-mentioned telecommunications stocks are grouped under the broader Computer and Technology sector (one of the 16 Zacks sectors).
For now, let’s take a look at the fundamentals (both financial and non-financial metrics) of AT&T and Sprint to help investors decide on which stock to choose.
2 Telecom Stocks Poised to Release Earnings
Our quantitative model offers some insight into stocks that are about to report earnings. Per the model, a stock needs to have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, to deliver an earnings beat.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
AT&T
We are bullish about AT&T’s opportunities arising from the postpaid and prepaid wireless subscriber count, per the Zacks Consensus Estimate. The Zacks Consensus Estimate of postpaid wireless subscriber addition for third quarter is 130 million and that of prepaid wireless is 270 million. Improvement in subscriber addition holds promise for AT&T in the to-be-reported quarter.
Per the Zacks Consensus Estimate, postpaid churn (another crucial metric for the wireless industry) is projected to be 0.01% for both the Business Solutions and Consumer Mobility segments. Operating revenues for wireless services is estimated to be around $17,709 million in the to-be reported quarter.
Accordingly, AT&T delivered a positive earnings surprise of 6.76% in the last reported quarter. The company’s bottom line was in line with the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 1.69%.
AT&T has an Earnings ESP of -0.96% because the Most Accurate estimate is at 74 cents while the Zacks Consensus Estimate is pegged at 75 cents.
AT&T Inc. Price and EPS Surprise
AT&T Inc. Price and EPS Surprise | AT&T Inc. Quote
AT&T has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult. (read more: What's in the Offing for AT&T this Earnings Season?).
Sprint
Sprint has an Earnings ESP of -19.00%. The Most Accurate estimate is at a loss of 3 cents while the Zacks Consensus Estimate is pegged at a loss of 2 cents. The company delivered positive earnings surprises in two of the last four quarters, with an average beat of 129.47%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sprint Corporation Price and EPS Surprise
Sprint Corporation Price and EPS Surprise | Sprint Corporation Quote
Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Per estimates, total operating revenues for wireless segment was $7,732 million, while that of wireline segment grossed $419 million.
Meanwhile, net postpaid wireless subscriber addition for Sprint in the to-be-reported quarter is estimated at around 162 million and that of prepaid is expected to be 103 million. The Zacks Consensus Estimate for postpaid ARPU (average revenue per user) and prepaid ARPU is $46.89 and $37.62, respectively. Moreover, postpaid churn and prepaid churn is estimated to be 0.02% and 0.05%, respectively.
Following the above comparison, let’s get notified with what’s going on in the current/ongoing quarter till date.
Price Performance
Over the past three months, shares of AT&T and Sprint have declined 2.7% and 18.8%, respectively, as against the industry's gain of 0.8%.
Overview of Q3 Earnings So Far
We are in the thick of third-quarter earnings season with results from 87 S&P 500 members, accounting for 24.7% of the index’s total market capitalization (based on the latest Earnings Preview). Total earnings for these companies are up 9.4% from the same period last year on 7.3% higher revenues, with 71.3% beating EPS estimates and 70.1% surpassing revenue estimates.
More than 700 companies are scheduled to release results this week, including 180 S&P 500 members. We can safely conclude that the third-quarter earnings season is off to a solid start.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>