We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Wireless Stocks Likely to Benefit Despite Macroeconomic Challenges
Read MoreHide Full Article
The Zacks Wireless National industry is likely to benefit from fast-track 5G deployment, extensive fiber densification and advancing 6G research. However, high capital expenditures for infrastructure upgrades, supply-chain disruptions due to the Iran war and shipping restrictions in the Strait of Hormuz, oil price volatility and high customer inventory levels remain deterrents.
Amid this challenging macroeconomic backdrop, T-Mobile US, Inc. (TMUS - Free Report) , Array Digital Infrastructure, Inc. (AD - Free Report) and Cogent Communications Holdings, Inc. (CCOI - Free Report) are likely to gain in the long run from higher demand for sustainable networks with a wide proliferation of IoT, wireless traction and a solid broadband momentum.
Industry Description
The Zacks Wireless National industry primarily comprises firms that provide a comprehensive range of communication services and business solutions. These include wireless, wireline, local exchange, long-distance calls, data/broadband and Internet, video, managed networking, messaging, wholesale and cloud-based services to retail consumers. The firms within the industry also offer IP-based voice and data services, targeted advertising, television, streaming content, cable networks and publishing operations, multiprotocol label switching networking, fiber optic long-haul networks and hosting and communications systems to businesses and government agencies. In addition, the firms provide edge computing services that allow businesses to route application-specific traffic where required and where it is most effective, whether in the cloud, the network, or on their premises.
What's Shaping the Future of the Wireless National Industry?
Network Rationalization: The industry participants are realigning their wireless networks toward a software-centric model to cater to increasing business demands and customer needs through remote facilities. The industry players are focused on bringing improved operational efficiencies through network simplification and rationalization, boosting end-to-end provisioning time and driving standardization. Moreover, the firms are offering a variety of pathways to deliver services through a combination of network-based video transcoding, packaging, storage and compression technologies to provide new IP video formats, live TV, streaming services and home gateways to connected devices inside and outside the home.
Depleting Margins: Increased infrastructure spending for network upgrades has largely compromised short-term margins. Aggressive promotional expenses, lucrative discounts and the adoption of several low-priced service plans to attract and retain customers are eroding profits. A steady decline in linear TV subscribers and legacy services due to a challenging macroeconomic environment and high inflation adds to the margin woes. The industry firms are seeking diversification from legacy telecom services to more business, enterprise and wholesale opportunities. Companies are investing heavily to upgrade network and product portfolio, including considerable advances in software-defined, wide-area network capabilities and a new Cloud Core architecture, which is affecting profitability.
5G, Fiber on the Roll With 6G in Pipeline: Most industry participants are deploying the latest advanced technologies to deliver higher peak data speeds and capacity, driven by customer-focused planning, disciplined engineering and investments for infrastructure upgrades. The companies are also expanding their fiber optic networks to support 5G wireless standards and upcoming 6G technology. Further, leading firms in the industry have been deploying the C-Band spectrum to gain additional coverage. These mid-band airwaves offer significant bandwidth with better propagation characteristics for optimum coverage in rural and urban areas compared with mmWave. With low latency and increased bandwidth, business enterprises are increasingly embracing the exciting possibilities offered by artificial intelligence (AI) and the IoT via the real-time transfer of mobile data.
Volatility in Raw Material Prices: High raw material prices due to the Iran war, shipping restrictions in the Strait of Hormuz, soaring energy prices, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. The demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices. Wireless operators have been facing challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and affect operating and financial results.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Wireless National industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #177, which places it in the bottom 28% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates grim prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few wireless national stocks that are well-positioned to outperform the market based on a strong earnings outlook, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Outperforms S&P 500, Sector
The Zacks Wireless National industry has outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector over the past year.
The industry has gained 52.3% over this period compared with the S&P 500 and the sector’s growth of 21.2% and 25.9%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), which is the most appropriate multiple for valuing telecom stocks, the industry is currently trading at 24.43X compared with the S&P 500’s 17.76X. It is also above the sector’s trailing 12-month EV/EBITDA of 18.92X.
Over the past five years, the industry has traded as high as 28.20X, as low as 4.93X and at the median of 8.01X, as the chart below shows.
Trailing 12-Month Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
3 Wireless National Stocks to Keep a Close Eye on
T-Mobile: Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company’s business model largely depends on its “Un-carrier Value Proposition,” which aims to enhance customer satisfaction by offering the latest products at cheaper rates and on simple terms and conditions. The company continues to boast a leadership position in the 5G market. Its 5G network reportedly covers 98% of Americans, or 330 million people in the country. The Ultra Capacity 5G delivers superfast speeds, powering 5G smartphones and enabling innovators to deliver transformational 5G experiences. The stock has a long-term earnings growth expectation of 14.4% and delivered an earnings surprise of 17.3%, on average, in the trailing four quarters. It has a VGM Score of A. T-Mobile currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TMUS
Array Digital: Headquartered in Chicago, IL, Array Digital (previously known as United States Cellular Corporation) is a leading full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses. The company is benefiting from solid user engagement in its fixed wireless business and an improvement in tower rental revenues. The geographical diversity and well-balanced presence across various major wireless carriers highlight the robustness of its tower rental portfolio. Management's efforts to enhance operational efficiency and drive cost optimization across its operations have significantly boosted profitability despite a challenging competitive environment. This Zacks Rank #3 firm delivered an earnings surprise of 69.4%, on average, in the trailing four quarters. Earnings estimates for 2026 have been increased 488.9% over the past year.
Price and Consensus: AD
Cogent: Headquartered in Washington, DC, Cogent is a Tier 1 Internet Service Provider (ISP) that offers low-cost, high-speed Internet access, private network services and colocation center services with ultra-low latency data transmission. It addresses the dynamic needs of various small and medium-sized businesses, ISPs and other bandwidth-intensive organizations across the globe. The company offers state-of-the-art colocation data center services that provide constant power supply and backup generators, making it ideal for disaster recovery and data backup. Its data centers provide a conducive environment for coherent connectivity, security, availability and performance to its end customers. High-speed bandwidth and dedicated Internet access remain its highest priority, backed by a team of committed customer support and local provisioning teams to clinch maximum reliability. The stock delivered an earnings surprise of 28.4%, on average, in the trailing four quarters. It has a VGM Score of B. Cogent currently carries a Zacks Rank #2 (Buy).
View the Zacks #1 Rank List
Image: Shutterstock
3 Wireless Stocks Likely to Benefit Despite Macroeconomic Challenges
The Zacks Wireless National industry is likely to benefit from fast-track 5G deployment, extensive fiber densification and advancing 6G research. However, high capital expenditures for infrastructure upgrades, supply-chain disruptions due to the Iran war and shipping restrictions in the Strait of Hormuz, oil price volatility and high customer inventory levels remain deterrents.
Amid this challenging macroeconomic backdrop, T-Mobile US, Inc. (TMUS - Free Report) , Array Digital Infrastructure, Inc. (AD - Free Report) and Cogent Communications Holdings, Inc. (CCOI - Free Report) are likely to gain in the long run from higher demand for sustainable networks with a wide proliferation of IoT, wireless traction and a solid broadband momentum.
Industry Description
The Zacks Wireless National industry primarily comprises firms that provide a comprehensive range of communication services and business solutions. These include wireless, wireline, local exchange, long-distance calls, data/broadband and Internet, video, managed networking, messaging, wholesale and cloud-based services to retail consumers. The firms within the industry also offer IP-based voice and data services, targeted advertising, television, streaming content, cable networks and publishing operations, multiprotocol label switching networking, fiber optic long-haul networks and hosting and communications systems to businesses and government agencies. In addition, the firms provide edge computing services that allow businesses to route application-specific traffic where required and where it is most effective, whether in the cloud, the network, or on their premises.
What's Shaping the Future of the Wireless National Industry?
Network Rationalization: The industry participants are realigning their wireless networks toward a software-centric model to cater to increasing business demands and customer needs through remote facilities. The industry players are focused on bringing improved operational efficiencies through network simplification and rationalization, boosting end-to-end provisioning time and driving standardization. Moreover, the firms are offering a variety of pathways to deliver services through a combination of network-based video transcoding, packaging, storage and compression technologies to provide new IP video formats, live TV, streaming services and home gateways to connected devices inside and outside the home.
Depleting Margins: Increased infrastructure spending for network upgrades has largely compromised short-term margins. Aggressive promotional expenses, lucrative discounts and the adoption of several low-priced service plans to attract and retain customers are eroding profits. A steady decline in linear TV subscribers and legacy services due to a challenging macroeconomic environment and high inflation adds to the margin woes. The industry firms are seeking diversification from legacy telecom services to more business, enterprise and wholesale opportunities. Companies are investing heavily to upgrade network and product portfolio, including considerable advances in software-defined, wide-area network capabilities and a new Cloud Core architecture, which is affecting profitability.
5G, Fiber on the Roll With 6G in Pipeline: Most industry participants are deploying the latest advanced technologies to deliver higher peak data speeds and capacity, driven by customer-focused planning, disciplined engineering and investments for infrastructure upgrades. The companies are also expanding their fiber optic networks to support 5G wireless standards and upcoming 6G technology. Further, leading firms in the industry have been deploying the C-Band spectrum to gain additional coverage. These mid-band airwaves offer significant bandwidth with better propagation characteristics for optimum coverage in rural and urban areas compared with mmWave. With low latency and increased bandwidth, business enterprises are increasingly embracing the exciting possibilities offered by artificial intelligence (AI) and the IoT via the real-time transfer of mobile data.
Volatility in Raw Material Prices: High raw material prices due to the Iran war, shipping restrictions in the Strait of Hormuz, soaring energy prices, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. The demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices. Wireless operators have been facing challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and affect operating and financial results.
Zacks Industry Rank Indicates Bleak Prospects
The Zacks Wireless National industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #177, which places it in the bottom 28% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates grim prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few wireless national stocks that are well-positioned to outperform the market based on a strong earnings outlook, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Outperforms S&P 500, Sector
The Zacks Wireless National industry has outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector over the past year.
The industry has gained 52.3% over this period compared with the S&P 500 and the sector’s growth of 21.2% and 25.9%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to-EBITDA (EV/EBITDA), which is the most appropriate multiple for valuing telecom stocks, the industry is currently trading at 24.43X compared with the S&P 500’s 17.76X. It is also above the sector’s trailing 12-month EV/EBITDA of 18.92X.
Over the past five years, the industry has traded as high as 28.20X, as low as 4.93X and at the median of 8.01X, as the chart below shows.
Trailing 12-Month Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
3 Wireless National Stocks to Keep a Close Eye on
T-Mobile: Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company’s business model largely depends on its “Un-carrier Value Proposition,” which aims to enhance customer satisfaction by offering the latest products at cheaper rates and on simple terms and conditions. The company continues to boast a leadership position in the 5G market. Its 5G network reportedly covers 98% of Americans, or 330 million people in the country. The Ultra Capacity 5G delivers superfast speeds, powering 5G smartphones and enabling innovators to deliver transformational 5G experiences. The stock has a long-term earnings growth expectation of 14.4% and delivered an earnings surprise of 17.3%, on average, in the trailing four quarters. It has a VGM Score of A. T-Mobile currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: TMUS
Array Digital: Headquartered in Chicago, IL, Array Digital (previously known as United States Cellular Corporation) is a leading full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses. The company is benefiting from solid user engagement in its fixed wireless business and an improvement in tower rental revenues. The geographical diversity and well-balanced presence across various major wireless carriers highlight the robustness of its tower rental portfolio. Management's efforts to enhance operational efficiency and drive cost optimization across its operations have significantly boosted profitability despite a challenging competitive environment. This Zacks Rank #3 firm delivered an earnings surprise of 69.4%, on average, in the trailing four quarters. Earnings estimates for 2026 have been increased 488.9% over the past year.
Price and Consensus: AD
Cogent: Headquartered in Washington, DC, Cogent is a Tier 1 Internet Service Provider (ISP) that offers low-cost, high-speed Internet access, private network services and colocation center services with ultra-low latency data transmission. It addresses the dynamic needs of various small and medium-sized businesses, ISPs and other bandwidth-intensive organizations across the globe. The company offers state-of-the-art colocation data center services that provide constant power supply and backup generators, making it ideal for disaster recovery and data backup. Its data centers provide a conducive environment for coherent connectivity, security, availability and performance to its end customers. High-speed bandwidth and dedicated Internet access remain its highest priority, backed by a team of committed customer support and local provisioning teams to clinch maximum reliability. The stock delivered an earnings surprise of 28.4%, on average, in the trailing four quarters. It has a VGM Score of B. Cogent currently carries a Zacks Rank #2 (Buy).
Price and Consensus: CCOI