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Key Predictions for Q3 Earnings Reports of SBAC, CTL, LVLT
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The third-quarter 2017 earnings seasons is picking pace with results from 229 S&P 500 members, accounting for 48.1% of the index’s total market capitalization (based on our latest Earnings Outlook). Total earnings for these companies are up 7.7% from the same period last year on 5% higher revenues, with 75.5% beating EPS and 65.1% beating revenue estimates.
Notably, 271 companies are yet to release their quarterly numbers. Total third-quarter earnings are expected to be up 4.1% from the prior-year quarter on 5.2% higher revenues.
With this overview of the third-quarter 2017 earnings season, let’s look at the ongoing trends in the telecommunications industry. So far, we have results from four major telecommunication companies — Verizon Communications Inc (VZ - Free Report) , AT&T Inc (T - Free Report) , Sprint Corp (S - Free Report) and T-Mobile US Inc (TMUS - Free Report) .
Verizon and Sprint delivered mixed third-quarter financial results, with a massive gain of postpaid and prepaid wireless subscribers. T-Mobile US delivered strong third-quarter 2017 financial results with 1.329 million net customer addition, signifying the 18th successive quarter of over 1 million net customer additions. We believe that the company’s network modernization and integration efforts, unlimited data plans, promotional offers in both postpaid and prepaid plans have paid off in terms of the huge subscriber gain in the reported quarter.
However, AT&T posted weak third-quarter 2017 financial results with 44.8% year-over-year fall in the net gain of postpaid wireless subscribers. The company also lost 89,000 video customers in the reported quarter due to cord-cutting.
We appreciate the companies’ success in maintaining their subscriber gain momentum despite operating in a competitive and saturated domestic wireless market. But, we are concerned about the increasing competition from the online video streaming service providers, which have become a direct threat to the pay-TV businesses of these stocks.
With such mixed thoughts, we keenly await results from other telecommunication stocks on Oct 30. We will study the fundamentals (both financial and non-financial metrics) of these stocks to aid investment decision.
Stocks to Watch for Q3 Earnings on Oct 30
Our quantitative model offers some insight into stocks that are about to report their 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 earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, we also 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.
Investors interested in the telecommunication stocks can watch out for the three companies that are expected to report their third-quarter 2017 numbers on Oct 30.
SBA Communications (SBAC - Free Report) , a leading independent owner and operator of wireless communications infrastructure in the United States, is slated to report after the closing bell.
Improvement in revenues holds promise for SBA Communications’ segments. While revenues for the Site Leasing segment is estimated around $408 million by the Zacks Consensus Estimate, the same for Site Development segment is anticipated at $23.79 million. In the third quarter of 2017, Domestic Site Leasing revenues are expected at $330 million and International Site Leasing revenues are projected at $77 million.
Per estimates, the company has plans to construct 114 towers and purchase 211 towers in the to-be-reported quarter. The company will acquire 52 domestic sites and 106 international sites in the said quarter. The increase in the number of towers and sites to be purchased portrays an improvement in the company’s operations.
Moreover, the chances of this company beating the Zacks Consensus Estimate in the quarter under review are high. The company has an Earnings ESP of +12.00% (as the Most Accurate estimate is pegged at 28 cents, higher than the Zacks Consensus Estimate of 25 cents). A favorable Earnings ESP indicates a positive earnings surprise.
CenturyLinkInc.’s Zacks Consensus Estimate for third-quarter Business Segment - Data Integration revenues is pegged at $145 million, which is above $123 million reported in the second quarter of 2017. The same for Legacy Services revenues is pegged at $1,087 million, below the figure of $1,107 million reported in the second quarter of 2017. Strategic Services revenues are pegged at $972 million which is also below the $985 million reported in second-quarter 2017.
Under the Consumer segment, the Legacy Services revenues are pegged at $623 million, below the figure of $633 million reported in the second quarter of 2017. Strategic Services revenues are at $769 million compared with the $768 million reported in second-quarter 2017.
This leading U.S. regional wireline service provider displays a negative earnings surprise history, lagging the Zacks Consensus Estimate in three of the previous four quarters, with an average miss of 2.44%. Moreover, the company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 45 cents.
Despite a favorable Zacks Rank #3, the company’s 0.00% ESP dims the possibility of an earnings beat in the to-be reported quarter.
For Level 3 Communications Inc. , improvement in revenues from different regions marks a major positive in terms of geographic expansion. The company’s North America, EMEA and Latin American operations account for a major portion of its organic core revenue growth. Per the Zacks Consensus Estimate, the company will generate $147 million from the Enterprise segment and $35.75 million from the Wholesale segment of Latin America.
Meanwhile, EMEA (Europe, the Middle East and Africa) revenues are estimated at $176 million, with $108 million from the Wholesale channel, $13.95 million from the U.K. Government channel and $55 million from the Wholesale channel. Estimated revenues from Latin America and EMEA have been consistent with what was reported in the last quarter.
However, the Zacks Consensus Estimate for third-quarter North American Enterprise segment revenues is pegged at $1,210 million as against $1,192 million reported in the second quarter of 2017. The same for the Wholesale segment is at $405 million compared with $415 million reported in the second quarter of 2017.
In the last quarter, Level 3 Communications delivered a positive earnings surprise of 10.53%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters, with an average beat of 6.86%.
Despite such favorable revenue growth, positive earnings surprise history and a favorable Zacks Rank #3, the chances of this company beating the Zacks Consensus Estimate in the third quarter are low. This is because the company’s 0.00% Earnings ESP (as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 38 cents) acts as a spoiler.
All the above-mentioned telecommunications stocks are grouped under the broader Computer and Technology sector (one of the 16 Zacks sectors).
Irrespective of an earnings beat or miss, investors should focus on companies’ fundamentals to make investment decisions. Therefore, don’t forget to check our full write up on earnings releases of these stocks later.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Key Predictions for Q3 Earnings Reports of SBAC, CTL, LVLT
The third-quarter 2017 earnings seasons is picking pace with results from 229 S&P 500 members, accounting for 48.1% of the index’s total market capitalization (based on our latest Earnings Outlook). Total earnings for these companies are up 7.7% from the same period last year on 5% higher revenues, with 75.5% beating EPS and 65.1% beating revenue estimates.
Notably, 271 companies are yet to release their quarterly numbers. Total third-quarter earnings are expected to be up 4.1% from the prior-year quarter on 5.2% higher revenues.
With this overview of the third-quarter 2017 earnings season, let’s look at the ongoing trends in the telecommunications industry. So far, we have results from four major telecommunication companies — Verizon Communications Inc (VZ - Free Report) , AT&T Inc (T - Free Report) , Sprint Corp (S - Free Report) and T-Mobile US Inc (TMUS - Free Report) .
Verizon and Sprint delivered mixed third-quarter financial results, with a massive gain of postpaid and prepaid wireless subscribers. T-Mobile US delivered strong third-quarter 2017 financial results with 1.329 million net customer addition, signifying the 18th successive quarter of over 1 million net customer additions. We believe that the company’s network modernization and integration efforts, unlimited data plans, promotional offers in both postpaid and prepaid plans have paid off in terms of the huge subscriber gain in the reported quarter.
However, AT&T posted weak third-quarter 2017 financial results with 44.8% year-over-year fall in the net gain of postpaid wireless subscribers. The company also lost 89,000 video customers in the reported quarter due to cord-cutting.
We appreciate the companies’ success in maintaining their subscriber gain momentum despite operating in a competitive and saturated domestic wireless market. But, we are concerned about the increasing competition from the online video streaming service providers, which have become a direct threat to the pay-TV businesses of these stocks.
With such mixed thoughts, we keenly await results from other telecommunication stocks on Oct 30. We will study the fundamentals (both financial and non-financial metrics) of these stocks to aid investment decision.
Stocks to Watch for Q3 Earnings on Oct 30
Our quantitative model offers some insight into stocks that are about to report their 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 earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, we also 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.
Investors interested in the telecommunication stocks can watch out for the three companies that are expected to report their third-quarter 2017 numbers on Oct 30.
SBA Communications (SBAC - Free Report) , a leading independent owner and operator of wireless communications infrastructure in the United States, is slated to report after the closing bell.
Improvement in revenues holds promise for SBA Communications’ segments. While revenues for the Site Leasing segment is estimated around $408 million by the Zacks Consensus Estimate, the same for Site Development segment is anticipated at $23.79 million. In the third quarter of 2017, Domestic Site Leasing revenues are expected at $330 million and International Site Leasing revenues are projected at $77 million.
Per estimates, the company has plans to construct 114 towers and purchase 211 towers in the to-be-reported quarter. The company will acquire 52 domestic sites and 106 international sites in the said quarter. The increase in the number of towers and sites to be purchased portrays an improvement in the company’s operations.
Moreover, the chances of this company beating the Zacks Consensus Estimate in the quarter under review are high. The company has an Earnings ESP of +12.00% (as the Most Accurate estimate is pegged at 28 cents, higher than the Zacks Consensus Estimate of 25 cents). A favorable Earnings ESP indicates a positive earnings surprise.
Moreover, SBA Communications currently has a Zacks Rank #3, which increases the predictive power of the ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, a positive Earnings ESP along with a Zacks Rank #3, makes us confident of an earnings beat in the to-be-reported quarter (read more: Can SBA Communications Deliver a Beat in Q3 Earnings?)
CenturyLink Inc.’s Zacks Consensus Estimate for third-quarter Business Segment - Data Integration revenues is pegged at $145 million, which is above $123 million reported in the second quarter of 2017. The same for Legacy Services revenues is pegged at $1,087 million, below the figure of $1,107 million reported in the second quarter of 2017. Strategic Services revenues are pegged at $972 million which is also below the $985 million reported in second-quarter 2017.
Under the Consumer segment, the Legacy Services revenues are pegged at $623 million, below the figure of $633 million reported in the second quarter of 2017. Strategic Services revenues are at $769 million compared with the $768 million reported in second-quarter 2017.
This leading U.S. regional wireline service provider displays a negative earnings surprise history, lagging the Zacks Consensus Estimate in three of the previous four quarters, with an average miss of 2.44%. Moreover, the company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 45 cents.
Despite a favorable Zacks Rank #3, the company’s 0.00% ESP dims the possibility of an earnings beat in the to-be reported quarter.
For Level 3 Communications Inc. , improvement in revenues from different regions marks a major positive in terms of geographic expansion. The company’s North America, EMEA and Latin American operations account for a major portion of its organic core revenue growth. Per the Zacks Consensus Estimate, the company will generate $147 million from the Enterprise segment and $35.75 million from the Wholesale segment of Latin America.
Meanwhile, EMEA (Europe, the Middle East and Africa) revenues are estimated at $176 million, with $108 million from the Wholesale channel, $13.95 million from the U.K. Government channel and $55 million from the Wholesale channel. Estimated revenues from Latin America and EMEA have been consistent with what was reported in the last quarter.
However, the Zacks Consensus Estimate for third-quarter North American Enterprise segment revenues is pegged at $1,210 million as against $1,192 million reported in the second quarter of 2017. The same for the Wholesale segment is at $405 million compared with $415 million reported in the second quarter of 2017.
In the last quarter, Level 3 Communications delivered a positive earnings surprise of 10.53%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters, with an average beat of 6.86%.
Despite such favorable revenue growth, positive earnings surprise history and a favorable Zacks Rank #3, the chances of this company beating the Zacks Consensus Estimate in the third quarter are low. This is because the company’s 0.00% Earnings ESP (as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 38 cents) acts as a spoiler.
All the above-mentioned telecommunications stocks are grouped under the broader Computer and Technology sector (one of the 16 Zacks sectors).
Irrespective of an earnings beat or miss, investors should focus on companies’ fundamentals to make investment decisions. Therefore, don’t forget to check our full write up on earnings releases of these stocks later.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>