For Immediate Release
Chicago, IL – July 5, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Verizon Communications Inc. (VZ - Analyst Report), AT&T Inc. (T - Analyst Report), Sprint Nextel Corp. (S - Analyst Report), Apple Inc. (AAPL - Analyst Report) and Google Inc. (GOOG).
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Tuesday’s Analyst Blog:
Picking Telecom Stocks? See Our DCF
Despite the lingering global economic woes, the U.S. telecom service providers are delivering consistent growth making their stocks attractive for long-term investments. Investors betting on telecom stocks should take into account our 50-year discounted cash flow (DCF) analysis for healthy returns amid stiff competition and stringent regulations.
The top three U.S. mobile operators and service providers –– Verizon Communications Inc. (VZ - Analyst Report), AT&T Inc. (T - Analyst Report) and Sprint Nextel Corp. (S - Analyst Report) appear appealing in the current market turmoil. Verizon and AT&T gained about 12% and 17%, respectively, during the first half of the year while Sprint surged 39% reflecting its turnaround story.
Our DCF Analysis
If we go by our 50-year DCF analysis, Sprint is the most undervalued stock followed by Verizon at the current levels. As of July 2, Sprint is trading at a massive discount of 158.46% while Verizon is trading at a substantial discount of 54%. On the other hand, AT&T is trading at a slight premium of 22.35%.
Verizon, the U.S. wireless giant, is showing the largest consolidated revenue and earnings per share growth, each more than 3% over the next 50 years. Wireless revenue will also be the strongest at Verizon, increasing at a rate of 3.8% over the next 50 years. This excellent growth is reflected by the Zacks Consensus Estimate of $2.50 for fiscal 2012 and $2.79 for 2013, representing a significant growth of 16.17% and 11.52% year over year. Over the past three months, these estimates showed upward movements for Verizon.
Both Sprint and AT&T are expected to grow more than 3% in revenue and 1.8% in earnings per share. Wireless revenue should grow at a CAGR (2012–2062) of more than 3% for the two carriers. As a result, the Zacks Consensus Estimates are trending up for AT&T while moving down for Sprint over the past three months.
The estimates for AT&T have increased by nickel to $2.38 for 2012 and by three cents to $2.54 for 2013, representing increases of 8.01% and 6.91%, respectively. Coming to Sprint, the Zacks Consensus Estimate is pegged at a loss of $1.58 for 2012, down 7 cents over the last three months and represents a drastic decline of 135.25% year over year. For 2013, the Zacks Consensus Estimate is down 12 cents at a net loss of $1.13, but is showing an upside of 28.45% year over year.
Over the next 10 years (2012–2022), revenue for these three carriers would grow nearly 3% each. However, earnings per share look highly attractive for Verizon with growth of 4.19% followed by 2.6% growth for AT&T. Notably, Sprint is expected to generate negative earnings per share growth of approximately 2.0%.
Based on macro data points, these companies have a bright outlook in the years ahead. Most of the future growth of the telecom industry depends on the wireless business as subscribers are discontinuing landlines and moving quickly to wireless connections.
With the surging demand for data traffic, these carriers are expected to fuel exceptional growth based on their entrance into the cloud computing space and deployment of the most advanced 4G LTE networks across several markets. Further, smartphones, in particular Apple Inc.’s (AAPL - Analyst Report) iPhones and Google Inc.’s (GOOG) Android-based handsets, tablets and 4G LTE will facilitate the companies to boost market share over the next several years.
Based on the expected strong financials and growth prospects, we find the shares of these major carriers intriguing options to play in the broad telecom sector.
We are maintaining long-term Neutral ratings on Verizon, AT&T and Sprint. For the short term (1–3 months), Verizon holds the Zacks #2 (Buy) Rank while AT&T and Sprint retain the Zacks #3 (Hold) Rank.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Zacks Investment Research
800-767-3771 ext. 9339