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Will Top-Line Contraction Dent AT&T's (T) Earnings in Q3?
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AT&T Inc. (T - Free Report) is scheduled to report third-quarter 2022 results, before the opening bell, on Oct 20. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 5 cents. In the third quarter, the company is likely to have recorded lower revenues year over year despite improving market conditions due to continued infrastructure investments for 5G rollout across the country, spin-off and divestment of businesses.
Factors at Play
In the third quarter, AT&T continued to expand its 5G network infrastructure and launched 5G+ service in select areas. The company’s 5G network currently covers more than 281 million users across the country, and its 5G+ network is available in parts of 45 cities. AT&T has deployed the C-Band spectrum in a phased manner to further expand its 5G+ coverage. It is benefiting from lower levels of wireless churn due to seamless access to 5G technology on its unlimited wireless plans for consumers and businesses and the growing adoption of Unlimited Elite wireless plans. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T augmented its critical communications network by expanding 5G on FirstNet, boosting dedicated in-building connectivity and enhancing 9-1-1 resiliency across Tennessee with FirstNet as a wireless backup. This is expected to boost connectivity for public safety on FirstNet with high-quality Band 14 spectrum and AT&T commercial LTE network. This is likely to have translated into higher revenues for the company.
During the third quarter, AT&T continued with its aggressive fiber build-out initiatives as it aims to connect 3.5-4 million additional locations with fiber each year to significantly increase its existing fiber footprint to more than 30 million locations by the end of 2025. The company expects that 75% of its network footprint will be either served by fiber or 5G, which will likely halve its legacy copper services exposure. These simplification initiatives are likely to have driven additional cost savings while creating new revenue opportunities.
However, adverse foreign currency translations and high operating costs for 5G deployments and fiber expansion are likely to have led to soft margins in the quarter. The infrastructure investments are expected to have weighed on the margins. Moreover, the divestment of Xandr and the WarnerMedia spin-off are likely to have resulted in top-line contraction on a year-over-year basis. However, this will likely enable the carrier to focus on its core businesses.
The Zacks Consensus Estimate for total revenues of the company stands at $29,816 million, indicating a decline from $39,922 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 61 cents per share. It had reported earnings of 87 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for AT&T for the third quarter. 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.70%, with the former pegged at 65 cents and the latter at 60 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +8.18% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Oct 27.
The Earnings ESP for Apple Inc. (AAPL - Free Report) is +0.86% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 27.
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Will Top-Line Contraction Dent AT&T's (T) Earnings in Q3?
AT&T Inc. (T - Free Report) is scheduled to report third-quarter 2022 results, before the opening bell, on Oct 20. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 5 cents. In the third quarter, the company is likely to have recorded lower revenues year over year despite improving market conditions due to continued infrastructure investments for 5G rollout across the country, spin-off and divestment of businesses.
Factors at Play
In the third quarter, AT&T continued to expand its 5G network infrastructure and launched 5G+ service in select areas. The company’s 5G network currently covers more than 281 million users across the country, and its 5G+ network is available in parts of 45 cities. AT&T has deployed the C-Band spectrum in a phased manner to further expand its 5G+ coverage. It is benefiting from lower levels of wireless churn due to seamless access to 5G technology on its unlimited wireless plans for consumers and businesses and the growing adoption of Unlimited Elite wireless plans. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T augmented its critical communications network by expanding 5G on FirstNet, boosting dedicated in-building connectivity and enhancing 9-1-1 resiliency across Tennessee with FirstNet as a wireless backup. This is expected to boost connectivity for public safety on FirstNet with high-quality Band 14 spectrum and AT&T commercial LTE network. This is likely to have translated into higher revenues for the company.
During the third quarter, AT&T continued with its aggressive fiber build-out initiatives as it aims to connect 3.5-4 million additional locations with fiber each year to significantly increase its existing fiber footprint to more than 30 million locations by the end of 2025. The company expects that 75% of its network footprint will be either served by fiber or 5G, which will likely halve its legacy copper services exposure. These simplification initiatives are likely to have driven additional cost savings while creating new revenue opportunities.
However, adverse foreign currency translations and high operating costs for 5G deployments and fiber expansion are likely to have led to soft margins in the quarter. The infrastructure investments are expected to have weighed on the margins. Moreover, the divestment of Xandr and the WarnerMedia spin-off are likely to have resulted in top-line contraction on a year-over-year basis. However, this will likely enable the carrier to focus on its core businesses.
The Zacks Consensus Estimate for total revenues of the company stands at $29,816 million, indicating a decline from $39,922 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 61 cents per share. It had reported earnings of 87 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for AT&T for the third quarter. 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.70%, with the former pegged at 65 cents and the latter at 60 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AT&T Inc. Price and EPS Surprise
AT&T Inc. price-eps-surprise | AT&T Inc. Quote
Zacks Rank: AT&T has a Zacks Rank #3.
Other Stocks to Consider
Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this season:
Verizon Communications Inc. (VZ - Free Report) is set to release quarterly numbers on Oct 21. It has an Earnings ESP of +0.26% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for T-Mobile US, Inc. (TMUS - Free Report) is +8.18% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Oct 27.
The Earnings ESP for Apple Inc. (AAPL - Free Report) is +0.86% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 27.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.