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Telecom Stocks Earnings to Watch on Aug 5: MSI, COMM & More

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The overall Technology sector, of which Telecom is an essential part, is likely to report relatively modest earnings for the April-June quarter compared with other sectors. Despite supply chain disruptions due to chip shortage affecting normal business operations of several telecom firms, the sector appears to have been well placed with recurring revenues backed by digital sustainability. Better-than-expected sector revenues with a faster pace of 5G deployment and rapid proliferation of IoT devices amid rising work-from-home trend instill confidence.

Although the sector appears to have overcome the pandemic-induced adversities through gradual resumption of business activities, profitability has largely been compromised. Various trade restrictions on grounds of national security concerns have eroded sector margins, while higher infrastructure investments for 5G networks have increased operating costs. Upfront capital investments 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.

To sum up, although technological advances have changed the way consumers communicate resulting in higher home data consumption and video streaming, 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 up 54.6% on 23.4% year-over-year higher revenues compared with the respective tallies of 53.9% and 24.4% in the prior quarter.

Let’s take a look at five leading Telecom stocks that are slated to report quarterly results on Aug 5.

Motorola Solutions, Inc. (MSI - Free Report) is scheduled to report second-quarter 2021 results after the closing bell. During first-quarter 2020 earnings release, management projected second-quarter 2021 non-GAAP earnings in the $1.90-$1.95 per share range on year-over-year revenue growth of 19-20%. The Zacks Consensus Estimate for total revenues for the second quarter is pegged at $1,942 million. In the year-earlier quarter, it generated revenues of $1,618 million. The consensus mark for earnings is currently pegged at $1.92 per share, indicating an improvement from $1.39 reported in the year-earlier quarter.

Our proven model predicts an earnings beat for Motorola 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 is perfectly the case here.

Motorola currently has an Earnings ESP of +0.59% and a Zacks Rank #3.

Motorola Solutions, Inc. Price and EPS Surprise

Motorola Solutions, Inc. Price and EPS Surprise

Motorola Solutions, Inc. price-eps-surprise | Motorola Solutions, Inc. Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

In the second quarter, Motorola announced the deployment of its VB400 body-worn cameras by the Malta Police Force for all frontline officers across the country as part of its modernization strategy. It also enriched its video security and analytics portfolio with the introduction of a scanning solution dubbed Concealed Weapon Detection. The company introduced additional services to its cybersecurity services portfolio in the quarter. The expansion is primarily aimed at safeguarding mission-critical operations of various public safety agencies and enterprises against malicious activities like data breaches. With healthy demand across land mobile radio products and other devices, driven by a comprehensive suite of services that ensures continuity and reduces risks related to critical communications operations, the company is likely to have recorded top-line expansion.

CommScope Holding Company, Inc. (COMM - Free Report) is scheduled to report second-quarter 2021 results before the opening bell. The consensus mark for revenues is pegged at $2,148 million, which suggests an improvement of 2.1% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for earnings is pegged at 44 cents per share. The figure indicates an improvement of 37.5% from the year-ago quarter’s reported figure.  

CommScope currently has an Earnings ESP of -3.92% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, CommScope is dedicatedly developing solutions designed to support wireline and wireless network convergence, which will be essential for the success of 5G technology. The company’s portfolio of solutions has been specifically designed to help global service providers to efficiently deploy fiber networks. CommScope expects big North American telecom companies and cable operators to continue rolling out avant-garde solutions to meet the rising demand for bandwidth. This is likely to have generated incremental revenues during the quarter.

Viasat Inc. (VSAT - Free Report) is scheduled to report first-quarter fiscal 2022 results before the opening bell. The consensus mark for revenues is pegged at $623 million, which suggests an improvement of 17.5% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for earnings is pegged at 3 cents per share. The figure indicates an improvement from a loss of 20 cents per share in the year-ago quarter.  

Viasat currently has an Earnings ESP of 0.00% and a Zacks Rank #3.

Viasat Inc. Price and EPS Surprise

Viasat Inc. Price and EPS Surprise

Viasat Inc. price-eps-surprise | Viasat Inc. Quote

The company is likely to have generated incremental revenues on the back of a solid retail distribution network, which accounts for a rising proportion of high value and high bandwidth subscriber base, and growing adoption of in-flight Wi-Fi services in commercial aircraft. Viasat’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models. The buyout of Eutelsat’s 51% interest in a joint venture for complete ownership control is expected to augment Viasat’s established retail broadband and mobility services footprint in Europe. This is expected to reinforce its diverse business portfolio, thereby facilitating further market penetration. This is likely to have resulted in top-line growth in the quarter.

Bandwidth Inc. (BAND - Free Report) is slated to report second-quarter 2021 results after the closing bell. For the second quarter, total revenues are expected in the range of $116-$117 million. The Zacks Consensus Estimate for total revenues for the second quarter is pegged at $115 million. In the year-earlier quarter, it generated revenues of $77 million. Bandwidth expects adjusted earnings in the range of 8-10 cents per share. The consensus mark for earnings is currently pegged at 9 cents per share, indicating a decline from 13 cents reported in the year-earlier quarter.

Bandwidth currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
 

Bandwidth Inc. Price and EPS Surprise

Bandwidth Inc. Price and EPS Surprise

Bandwidth Inc. price-eps-surprise | Bandwidth Inc. Quote

Bandwidth enables enterprises to rapidly scale up existing communications functionalities for various other applications and devices with its easy-to-use software APIs. It supports high user volumes without affecting deliverability and eliminates performance degradation in a cost-effective manner. Bandwidth follows a usage-based revenue model that enables it to simultaneously augment its top-line growth and increase subscriber base. Incremental revenues from the Voxbone buyout are likely to be reflected in the upcoming results.

InterDigital, Inc. (IDCC - Free Report) is scheduled to report second-quarter 2021 results before the opening bell. The consensus mark for revenues is pegged at $86 million, which suggests a decline from $104 million recorded in the year-ago quarter. The Zacks Consensus Estimate is pegged at a loss of 25 cents per share. The company recorded earnings of 72 cents per share in the year-ago quarter.

InterDigital currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
 

InterDigital, Inc. Price and EPS Surprise

InterDigital, Inc. Price and EPS Surprise

InterDigital, Inc. price-eps-surprise | InterDigital, Inc. Quote

The company is likely to have benefited from a global footprint, diversified product portfolio and the ability to penetrate in different markets. Apart from its strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings are likely to have driven considerable value. However, the uncertain macroeconomic environment due to the pandemic has led to a loss of business for InterDigital. Moreover, latent tensions between the United States and China owing to trade restrictions imposed on the sale of communication equipment and technology solutions are likely to have dented its profitability.