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The overall Technology sector, of which Telecom is an essential part, is likely to report relatively healthy second-quarter 2020 earnings compared with other sectors. Despite taking a hit due to the coronavirus pandemic, which disrupted normal business operations of various telecom firms, the sector appears to have been better placed with digital sustainability being the norm of the day. However, a ‘supply shock’ caused by factory shutdowns and travel restrictions sparked by the virus outbreak have affected the sector’s profitability. Sector revenues, particularly within the chip industry, are expected to have declined as the market bore the brunt of the adverse economic impact of the global lockdown.
Various trade restrictions on grounds of national security concerns further hampered the supply-chain mechanism of companies and eroded sector margins. In addition, higher infrastructure investments are expected to have escalated operating costs as 5G deployments picked up pace across the United States.
Upfront investments in capital and wireless spectrum for 5G have proven to be substantially higher than prior generations of wireless deployments due to network density requirements, potentially hurting return of capital metrics. The potential for meaningful revenues to lag 5G buildouts poses significant credit risks for providers pursuing aggressive deployments. This has become all the more pronounced as the industry lacks any clarity on the actual impact of the virus on businesses, forcing some companies to even withdraw guidance.
Technological advances have changed the way consumers communicate, resulting in higher home data consumption and video streaming as countless people seek the refuge of the safety of their homes to prevent exposure to the virus. But the worldwide mayhem induced by the virus, intense competition and commoditization of services have limited the chances of benefiting from these trends.
Per the latest Earnings Preview, total earnings for the Technology sector for the June quarter are expected to be down 10.9% on 0.3% higher revenues year over year. This compares unfavorably with the prior quarter’s earnings growth of 3.8% on 4.2% revenue growth.
Let’s take a look at three Telecom stocks that are slated to report quarterly results on Jul 29.
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report third-quarter fiscal 2020 results after the closing bell. For the third quarter, the company expects revenues of $4.4-$5.2 billion as the virus outbreak is likely to result in a 30% reduction in handset shipments compared to prior expectations. The Zacks Consensus Estimate for the same is pegged at $4,792 million. The company recorded revenues of $9,635 million in the year-earlier quarter. Management anticipates non-GAAP earnings of 60-80 cents per share. The consensus mark for earnings is currently pegged at 71 cents per share. Qualcomm recorded non-GAAP earnings of 80 cents per share in the prior-year quarter.
Our proven model does not conclusively predict an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This, however, is not the case here.
Qualcomm currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
During the quarter under review, Qualcomm set a new benchmark by unveiling a game-changing 5G chipset for low-cost smartphones for the masses. However, geopolitical tensions and a fractured relationship with China, which is one of the most important markets of Qualcomm, are likely to have harmed its supply-chain management and strained margins. The company expects a significant negative impact on device shipment due to the lengthening of handset replacement rates, stemming from the adverse economic impact of the coronavirus pandemic. This, in turn, is likely to have affected unit volumes. In addition, fierce competitive pressure from low-cost chipmakers amid the coronavirus-led worldwide mayhem is likely to have hurt the bottom line.
Qorvo Inc. (QRVO - Free Report) is scheduled to report first-quarter fiscal 2021 results, after the closing bell. The company expects first-quarter revenues of $710-$750 million. The consensus mark for revenues is pegged at $730.4 million, which suggests a decline of 5.8% from the year-ago quarter’s reported figure. Non-GAAP adjusted earnings are anticipated to be $1.13 per share. The Zacks Consensus Estimate for fiscal first-quarter earnings is also pegged at $1.13 per share. The figure indicates a decline of 16.9% from the year-ago quarter’s reported figure.
Qorvo currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
Qorvo’s fiscal first-quarter performance is expected to have benefited from the growing momentum for its solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi 6). However, sluggish demand for smartphones and the coronavirus-induced uncertainties are likely to have affected fiscal first-quarter revenues.
Knowles Corporation (KN - Free Report) is slated to report second-quarter 2020 results, after the closing bell. The consensus mark for revenues is pegged at $145 million, which implies a year-over-year decline of 29.3%. The Zacks Consensus Estimate for earnings is pegged at break-even, which indicates a 100% decline from the year-ago quarter’s reported figure.
Knowles currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
The company is likely to have benefited from increased voice-powered interactions as consumers tend to engage more with technology through natural, spoken commands across the mobile, ear and IoT platforms. However, the United States and Europe, which account for nearly 85% of the global hearing aid market, are likely to have witnessed a significant slowdown in orders due to the pandemic. Moreover, the Audio segment is likely to have recorded a substantial decline in revenues in second-quarter 2020 due to softer demand for hearing health solutions. Soft trend in the Mobile market, with weakness in the premium portion of the Android ecosystem, is another headwind for the audio business.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Telecom Stocks Earnings Roster on Jul 29: QCOM, QRVO & KN
The overall Technology sector, of which Telecom is an essential part, is likely to report relatively healthy second-quarter 2020 earnings compared with other sectors. Despite taking a hit due to the coronavirus pandemic, which disrupted normal business operations of various telecom firms, the sector appears to have been better placed with digital sustainability being the norm of the day. However, a ‘supply shock’ caused by factory shutdowns and travel restrictions sparked by the virus outbreak have affected the sector’s profitability. Sector revenues, particularly within the chip industry, are expected to have declined as the market bore the brunt of the adverse economic impact of the global lockdown.
Various trade restrictions on grounds of national security concerns further hampered the supply-chain mechanism of companies and eroded sector margins. In addition, higher infrastructure investments are expected to have escalated operating costs as 5G deployments picked up pace across the United States.
Upfront investments in capital and wireless spectrum for 5G have proven to be substantially higher than prior generations of wireless deployments due to network density requirements, potentially hurting return of capital metrics. The potential for meaningful revenues to lag 5G buildouts poses significant credit risks for providers pursuing aggressive deployments. This has become all the more pronounced as the industry lacks any clarity on the actual impact of the virus on businesses, forcing some companies to even withdraw guidance.
Technological advances have changed the way consumers communicate, resulting in higher home data consumption and video streaming as countless people seek the refuge of the safety of their homes to prevent exposure to the virus. But the worldwide mayhem induced by the virus, intense competition and commoditization of services have limited the chances of benefiting from these trends.
Per the latest Earnings Preview, total earnings for the Technology sector for the June quarter are expected to be down 10.9% on 0.3% higher revenues year over year. This compares unfavorably with the prior quarter’s earnings growth of 3.8% on 4.2% revenue growth.
Let’s take a look at three Telecom stocks that are slated to report quarterly results on Jul 29.
Qualcomm Incorporated (QCOM - Free Report) is scheduled to report third-quarter fiscal 2020 results after the closing bell. For the third quarter, the company expects revenues of $4.4-$5.2 billion as the virus outbreak is likely to result in a 30% reduction in handset shipments compared to prior expectations. The Zacks Consensus Estimate for the same is pegged at $4,792 million. The company recorded revenues of $9,635 million in the year-earlier quarter. Management anticipates non-GAAP earnings of 60-80 cents per share. The consensus mark for earnings is currently pegged at 71 cents per share. Qualcomm recorded non-GAAP earnings of 80 cents per share in the prior-year quarter.
Our proven model does not conclusively predict an earnings beat for Qualcomm this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This, however, is not the case here.
Qualcomm currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
During the quarter under review, Qualcomm set a new benchmark by unveiling a game-changing 5G chipset for low-cost smartphones for the masses. However, geopolitical tensions and a fractured relationship with China, which is one of the most important markets of Qualcomm, are likely to have harmed its supply-chain management and strained margins. The company expects a significant negative impact on device shipment due to the lengthening of handset replacement rates, stemming from the adverse economic impact of the coronavirus pandemic. This, in turn, is likely to have affected unit volumes. In addition, fierce competitive pressure from low-cost chipmakers amid the coronavirus-led worldwide mayhem is likely to have hurt the bottom line.
Qorvo Inc. (QRVO - Free Report) is scheduled to report first-quarter fiscal 2021 results, after the closing bell. The company expects first-quarter revenues of $710-$750 million. The consensus mark for revenues is pegged at $730.4 million, which suggests a decline of 5.8% from the year-ago quarter’s reported figure. Non-GAAP adjusted earnings are anticipated to be $1.13 per share. The Zacks Consensus Estimate for fiscal first-quarter earnings is also pegged at $1.13 per share. The figure indicates a decline of 16.9% from the year-ago quarter’s reported figure.
Qorvo currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
Qorvo, Inc. Price and EPS Surprise
Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
Qorvo’s fiscal first-quarter performance is expected to have benefited from the growing momentum for its solutions in defense (advanced radars and other electronic warfare products) and connectivity (Wi-Fi 6). However, sluggish demand for smartphones and the coronavirus-induced uncertainties are likely to have affected fiscal first-quarter revenues.
Knowles Corporation (KN - Free Report) is slated to report second-quarter 2020 results, after the closing bell. The consensus mark for revenues is pegged at $145 million, which implies a year-over-year decline of 29.3%. The Zacks Consensus Estimate for earnings is pegged at break-even, which indicates a 100% decline from the year-ago quarter’s reported figure.
Knowles currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
Knowles Corporation Price and EPS Surprise
Knowles Corporation price-eps-surprise | Knowles Corporation Quote
The company is likely to have benefited from increased voice-powered interactions as consumers tend to engage more with technology through natural, spoken commands across the mobile, ear and IoT platforms. However, the United States and Europe, which account for nearly 85% of the global hearing aid market, are likely to have witnessed a significant slowdown in orders due to the pandemic. Moreover, the Audio segment is likely to have recorded a substantial decline in revenues in second-quarter 2020 due to softer demand for hearing health solutions. Soft trend in the Mobile market, with weakness in the premium portion of the Android ecosystem, is another headwind for the audio business.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>