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Telecom Stock Roundup: Verizon, AT&T's Q2 Earnings & More
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In the last five trading days, telecom stocks’ initial downtrend was followed by a relatively flat trajectory, a sharp rise and an eventual sharp decline to wipe out almost all the gain. The late surge in stocks was driven by President Trump’s agreement with the European Union to avert a trade war. The performance was also propelled by solid sector earnings as most telecom firms managed to beat estimates. However, the sharp fall at the end of the week was primarily attributable to the top-line miss of a sector heavyweight.
After a series of tit-for-tat tariff battles, the United States and the European Union finally agreed to bury the hatchet when Trump and European Commission President Jean-Claude Juncker decided to work in unison to soothe investor nerves. Both the warring parties vouched to maintain “strong trade relations” and “work together toward zero tariffs, zero non-tariff barriers, zero subsidies on non auto-industrial goods.” The leaders also agreed to increase the export of soybean and liquefied natural gas to Europe and lower industrial tariffs on both sides.
Regarding company-specific news, quarterly earnings and new investments for network expansion took the center stage over the last five trading days.
Recap of the Week’s Most Important Stories
1. Verizon Communications Inc. (VZ - Free Report) continued its solid performance in second-quarter 2018, primarily led by the wireless business. The company recorded healthy top-line growth led by solid service revenues. The bottom line also benefited from significant savings from the tax reform.
Adjusted earnings were $1.20 per share compared with 96 cents in the year-earlier quarter and comfortably exceeded the Zacks Consensus Estimate of $1.14. Consolidated GAAP revenues increased 5.4% year over year to $32,203 million on the back of a solid performance in the wireless business and exceeded the Zacks Consensus Estimate of $31,718 million. (Read more: Verizon Beats Q2 Earnings on Healthy Top-Line Growth)
2. AT&T Inc. (T - Free Report) reported mixed second-quarter 2018 results with year-over-year decline in the top line despite solid wireless performance including postpaid phone gains, strong prepaid phone growth and stable postpaid churn.
Adjusted earnings for the quarter came in at 91 cents per share compared with 79 cents in the year-earlier quarter. The figure beat the Zacks Consensus Estimate of 85 cents. Quarterly consolidated revenues decreased 2.1% year over year to $38,986 million, primarily due to the impact of ASC 606, and missed the Zacks Consensus Estimate of $39,254 million. (Read more: AT&T Beats Q2 Earnings Estimates, Falters on Revenues)
3. Corning Incorporated (GLW - Free Report) reported healthy second-quarter 2018 results, driven by sales growth in each of its businesses owing to strong market demand and successful ramping of capacity expansions.
Core earnings for the quarter came in at $359 million or 38 cents per share compared with $400 million or 39 cents per share in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate by a penny. Quarterly core revenues increased 9% year over year to $2,759 million, surpassing the Zacks Consensus Estimate of $2,678 million. (Read more: Corning Tops Q2 Earnings on Healthy Revenue Growth)
4. Badger Meter, Inc. (BMI - Free Report) reported promising results for the second-quarter 2018. The company registered both record revenues and adjusted earnings, driven by higher domestic municipal sales of its flagship products and increased international sales, notably in the Middle East.
Adjusted net income increased 15.8% year over year to $12.3 million or 42 cents per share, achieving a record-high tally. The figure beat the Zacks Consensus Estimate of 40 cents. Quarterly revenues increased 9.1% year over year to an all-time high of $113.6 million and surpassed the Zacks Consensus Estimate of $111 million. (Read more: Badger Meter's Q2 Earnings Beat on Record Revenues)
5. T-Mobile US, Inc. (TMUS - Free Report) announced that it has launched Narrowband Internet of Things (NB-IoT) service across the United States. Notably, it is the first wireless provider to launch NB-IoT in the nation and the first in the world to unveil NB-IoT in the guard bands for optimal efficiency.
By incorporating NB-IoT in the guard bands, T-Mobile can now use spectrum resources more efficiently and IoT applications don’t have to compete with other data traffic for network resources. The company has collaborated with tech giants to deploy nationwide NB-IoT, laying the foundation for the 5G future. (Read more: T-Mobile Debuts Industry's Narrowband IoT Service Across US)
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and during the last six months.
In the last five trading days, Qualcomm Incorporated (QCOM - Free Report) was the major gainer with its share price increasing 1.1%. AT&T was the major decliner with its stock losing 4.8%.
Over the last six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 20% while AT&T declined the most with its shares falling 23.2%.
Over the last six months, the Zacks Telecommunications Services industry has recorded an average fall of 12.4% while the benchmark S&P 500 Index gained 0.1%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to the earnings releases of various firms within the sector.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Telecom Stock Roundup: Verizon, AT&T's Q2 Earnings & More
In the last five trading days, telecom stocks’ initial downtrend was followed by a relatively flat trajectory, a sharp rise and an eventual sharp decline to wipe out almost all the gain. The late surge in stocks was driven by President Trump’s agreement with the European Union to avert a trade war. The performance was also propelled by solid sector earnings as most telecom firms managed to beat estimates. However, the sharp fall at the end of the week was primarily attributable to the top-line miss of a sector heavyweight.
After a series of tit-for-tat tariff battles, the United States and the European Union finally agreed to bury the hatchet when Trump and European Commission President Jean-Claude Juncker decided to work in unison to soothe investor nerves. Both the warring parties vouched to maintain “strong trade relations” and “work together toward zero tariffs, zero non-tariff barriers, zero subsidies on non auto-industrial goods.” The leaders also agreed to increase the export of soybean and liquefied natural gas to Europe and lower industrial tariffs on both sides.
Regarding company-specific news, quarterly earnings and new investments for network expansion took the center stage over the last five trading days.
Recap of the Week’s Most Important Stories
1. Verizon Communications Inc. (VZ - Free Report) continued its solid performance in second-quarter 2018, primarily led by the wireless business. The company recorded healthy top-line growth led by solid service revenues. The bottom line also benefited from significant savings from the tax reform.
Adjusted earnings were $1.20 per share compared with 96 cents in the year-earlier quarter and comfortably exceeded the Zacks Consensus Estimate of $1.14. Consolidated GAAP revenues increased 5.4% year over year to $32,203 million on the back of a solid performance in the wireless business and exceeded the Zacks Consensus Estimate of $31,718 million. (Read more: Verizon Beats Q2 Earnings on Healthy Top-Line Growth)
2. AT&T Inc. (T - Free Report) reported mixed second-quarter 2018 results with year-over-year decline in the top line despite solid wireless performance including postpaid phone gains, strong prepaid phone growth and stable postpaid churn.
Adjusted earnings for the quarter came in at 91 cents per share compared with 79 cents in the year-earlier quarter. The figure beat the Zacks Consensus Estimate of 85 cents. Quarterly consolidated revenues decreased 2.1% year over year to $38,986 million, primarily due to the impact of ASC 606, and missed the Zacks Consensus Estimate of $39,254 million. (Read more: AT&T Beats Q2 Earnings Estimates, Falters on Revenues)
3. Corning Incorporated (GLW - Free Report) reported healthy second-quarter 2018 results, driven by sales growth in each of its businesses owing to strong market demand and successful ramping of capacity expansions.
Core earnings for the quarter came in at $359 million or 38 cents per share compared with $400 million or 39 cents per share in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate by a penny. Quarterly core revenues increased 9% year over year to $2,759 million, surpassing the Zacks Consensus Estimate of $2,678 million. (Read more: Corning Tops Q2 Earnings on Healthy Revenue Growth)
4. Badger Meter, Inc. (BMI - Free Report) reported promising results for the second-quarter 2018. The company registered both record revenues and adjusted earnings, driven by higher domestic municipal sales of its flagship products and increased international sales, notably in the Middle East.
Adjusted net income increased 15.8% year over year to $12.3 million or 42 cents per share, achieving a record-high tally. The figure beat the Zacks Consensus Estimate of 40 cents. Quarterly revenues increased 9.1% year over year to an all-time high of $113.6 million and surpassed the Zacks Consensus Estimate of $111 million. (Read more: Badger Meter's Q2 Earnings Beat on Record Revenues)
5. T-Mobile US, Inc. (TMUS - Free Report) announced that it has launched Narrowband Internet of Things (NB-IoT) service across the United States. Notably, it is the first wireless provider to launch NB-IoT in the nation and the first in the world to unveil NB-IoT in the guard bands for optimal efficiency.
By incorporating NB-IoT in the guard bands, T-Mobile can now use spectrum resources more efficiently and IoT applications don’t have to compete with other data traffic for network resources. The company has collaborated with tech giants to deploy nationwide NB-IoT, laying the foundation for the 5G future. (Read more: T-Mobile Debuts Industry's Narrowband IoT Service Across US)
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and during the last six months.
In the last five trading days, Qualcomm Incorporated (QCOM - Free Report) was the major gainer with its share price increasing 1.1%. AT&T was the major decliner with its stock losing 4.8%.
Over the last six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 20% while AT&T declined the most with its shares falling 23.2%.
Over the last six months, the Zacks Telecommunications Services industry has recorded an average fall of 12.4% while the benchmark S&P 500 Index gained 0.1%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to the earnings releases of various firms within the sector.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>