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3 Telecom Stocks Likely to Exceed Q2 Earnings Estimates
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In the second quarter of 2023, telecom stocks witnessed healthy demand trends with an accelerated pace of 5G deployment and increased fiber densification. Despite supply chain woes related to continued chip shortage and challenging macroeconomic environment, the industry seemed to benefit from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices.
A steady pace of 5G deployment and investments by leading carriers to increase their fiber footprint in rural areas to bridge the digital divide seemed to infuse confidence in the sector. Telecom firms facilitated a seamless transition from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation.
Factors at Play
5G Rollout Gaining Steam: With the exponential growth of mobile broadband traffic and home Internet solutions, demand for advanced networking architecture has increased manifold. This has forced service providers to upgrade their networks and support the surge in home data traffic. To maintain superior performance standards, there is a continuous need for network tuning and optimization, which creates demand for state-of-the-art wireless products and services. Moreover, a faster pace of 5G deployment is expected to augment the scalability, security and universal mobility of the telecommunications industry and propel the wide proliferation of IoT.
Fiber Densification: Expansion of fiber optic networks by carriers to support their 4G LTE and 5G wireless standards, as well as wireline connections, are acting as tailwinds. The fiber-optic cable network is vital for backhaul and the last mile local loop, which are required by wireless service providers for 5G deployment. Fiber networks are also essential for the growing deployment of small cells that bring the network closer to the user and supplement macro networks to provide extensive coverage.
Inflated Equipment Prices: The industry is continuously facing an acute shortage of chips, which are the building blocks for various equipment used by telecom carriers. Moreover, high raw material prices due to inflation, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. Although various steps have been taken to address the global shortage of semiconductor chips and devise ways to increase domestic production, the demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices.
Network Convergence: With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the industry is increasingly developing solutions to support wireline and wireless network convergence. The industry players have enabled enterprises to rapidly scale communications functionalities to a vast range of applications and devices with easy-to-use software application programming interfaces. The wide proliferation of cloud networking solutions further results in increased storage and computing on a virtual plane. As both consumers and enterprises use the network, there is tremendous demand for quality networking equipment.
Focus on Novel Technologies: Telecom firms enable customers to manage exponential bandwidth costs effectively through steady investments in state-of-the-art technologies. These include DOCSIS (Data Over Cable Service Interface Specification), DSL (Digital Subscriber Line) and Next Generation PON (Passive Optical Network) platforms that enable service providers to deliver the highest bandwidth to subscribers across any physical connection. Further, some firms offer a variety of pathways for providing services through a combination of network-based video transcoding, packaging, storage and compression technologies required to deliver new IP video formats and home gateways to connected devices inside and outside the home.
How to Pick?
A multitude of telecom stocks is likely to report earnings in the coming weeks. A solid earnings performance of the telecom sector could sow the seeds for future investments and R&D in network and 5G-enabled devices for superior 5G capabilities as the industry seeks to capitalize on the inherent growth potential.
Among a diverse range of companies, choosing the right stock for your portfolio could appear to be a colossal task. While it is impossible to be sure about such outperformers, our proprietary methodology makes the process fairly simple.
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), chances of an earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is an important ingredient of our proven model, which along with a top Zacks Rank, creates the perfect combination to determine stocks with the best chances to pull off a surprise in the upcoming earnings announcements. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Potential Winners
AT&T Inc. (T - Free Report) : Based in Dallas, TX, AT&T is the second largest wireless service provider in North America and one of the world’s leading communications service carriers. Through its subsidiaries and affiliates, the company offers a wide range of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services.
AT&T is benefiting from the 5G boom. In order to have a seamless transition among Wi-Fi, Long-Term Evolution (LTE) and 5G services, it intends to deploy a standards-based nationwide mobile 5G network. Its 5G service entails utilization of millimeter wave spectrum for deployment in dense pockets while in suburban and rural areas, it intends to deploy 5G on mid- and low-band spectrum holdings. AT&T currently has a Zacks Rank #3 and an Earnings ESP of +2.08%. The company is scheduled to report results before the opening bell on Jul 26.
T-Mobile US, Inc. (TMUS - Free Report) : Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers mobile voice, messaging and data services in the postpaid, prepaid and wholesale markets. T-Mobile is extensively deploying 5G and 4G LTE (Long-Term Evolution) networks. It also provides wireless devices, such as smartphones, tablets and other mobile communication devices and accessories manufactured by various suppliers.
T-Mobile’s business largely depends on its “Un-carrier Value Proposition”, which aims to enhance customer satisfaction by means of providing the latest products at cheaper rates and uncomplicated terms of conditions. Its Ultra Capacity 5G network is powered by the mid-band 2.5 GHz spectrum. T-Mobile plans to reach 300 million people within 2023. The stock currently has an Earnings ESP of +3.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. The company is scheduled to report results on Jul 27.
Motorola Solutions, Inc. (MSI - Free Report) : Based in Chicago, IL, Motorola is a leading communications equipment manufacturer. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. The communications equipment maker intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem. This Zacks Rank #2 stock has an Earnings ESP of +0.07%. The company is scheduled to report results on Aug 3.
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3 Telecom Stocks Likely to Exceed Q2 Earnings Estimates
In the second quarter of 2023, telecom stocks witnessed healthy demand trends with an accelerated pace of 5G deployment and increased fiber densification. Despite supply chain woes related to continued chip shortage and challenging macroeconomic environment, the industry seemed to benefit from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices.
A steady pace of 5G deployment and investments by leading carriers to increase their fiber footprint in rural areas to bridge the digital divide seemed to infuse confidence in the sector. Telecom firms facilitated a seamless transition from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation.
Factors at Play
5G Rollout Gaining Steam: With the exponential growth of mobile broadband traffic and home Internet solutions, demand for advanced networking architecture has increased manifold. This has forced service providers to upgrade their networks and support the surge in home data traffic. To maintain superior performance standards, there is a continuous need for network tuning and optimization, which creates demand for state-of-the-art wireless products and services. Moreover, a faster pace of 5G deployment is expected to augment the scalability, security and universal mobility of the telecommunications industry and propel the wide proliferation of IoT.
Fiber Densification: Expansion of fiber optic networks by carriers to support their 4G LTE and 5G wireless standards, as well as wireline connections, are acting as tailwinds. The fiber-optic cable network is vital for backhaul and the last mile local loop, which are required by wireless service providers for 5G deployment. Fiber networks are also essential for the growing deployment of small cells that bring the network closer to the user and supplement macro networks to provide extensive coverage.
Inflated Equipment Prices: The industry is continuously facing an acute shortage of chips, which are the building blocks for various equipment used by telecom carriers. Moreover, high raw material prices due to inflation, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. Although various steps have been taken to address the global shortage of semiconductor chips and devise ways to increase domestic production, the demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices.
Network Convergence: With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the industry is increasingly developing solutions to support wireline and wireless network convergence. The industry players have enabled enterprises to rapidly scale communications functionalities to a vast range of applications and devices with easy-to-use software application programming interfaces. The wide proliferation of cloud networking solutions further results in increased storage and computing on a virtual plane. As both consumers and enterprises use the network, there is tremendous demand for quality networking equipment.
Focus on Novel Technologies: Telecom firms enable customers to manage exponential bandwidth costs effectively through steady investments in state-of-the-art technologies. These include DOCSIS (Data Over Cable Service Interface Specification), DSL (Digital Subscriber Line) and Next Generation PON (Passive Optical Network) platforms that enable service providers to deliver the highest bandwidth to subscribers across any physical connection. Further, some firms offer a variety of pathways for providing services through a combination of network-based video transcoding, packaging, storage and compression technologies required to deliver new IP video formats and home gateways to connected devices inside and outside the home.
How to Pick?
A multitude of telecom stocks is likely to report earnings in the coming weeks. A solid earnings performance of the telecom sector could sow the seeds for future investments and R&D in network and 5G-enabled devices for superior 5G capabilities as the industry seeks to capitalize on the inherent growth potential.
Among a diverse range of companies, choosing the right stock for your portfolio could appear to be a colossal task. While it is impossible to be sure about such outperformers, our proprietary methodology makes the process fairly simple.
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), chances of an earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is an important ingredient of our proven model, which along with a top Zacks Rank, creates the perfect combination to determine stocks with the best chances to pull off a surprise in the upcoming earnings announcements. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Potential Winners
AT&T Inc. (T - Free Report) : Based in Dallas, TX, AT&T is the second largest wireless service provider in North America and one of the world’s leading communications service carriers. Through its subsidiaries and affiliates, the company offers a wide range of communication and business solutions that include wireless, local exchange, long-distance, data/broadband and Internet, video, managed networking, wholesale and cloud-based services.
AT&T is benefiting from the 5G boom. In order to have a seamless transition among Wi-Fi, Long-Term Evolution (LTE) and 5G services, it intends to deploy a standards-based nationwide mobile 5G network. Its 5G service entails utilization of millimeter wave spectrum for deployment in dense pockets while in suburban and rural areas, it intends to deploy 5G on mid- and low-band spectrum holdings. AT&T currently has a Zacks Rank #3 and an Earnings ESP of +2.08%. The company is scheduled to report results before the opening bell on Jul 26.
AT&T Inc. Price and EPS Surprise
AT&T Inc. price-eps-surprise | AT&T Inc. Quote
T-Mobile US, Inc. (TMUS - Free Report) : Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers mobile voice, messaging and data services in the postpaid, prepaid and wholesale markets. T-Mobile is extensively deploying 5G and 4G LTE (Long-Term Evolution) networks. It also provides wireless devices, such as smartphones, tablets and other mobile communication devices and accessories manufactured by various suppliers.
T-Mobile’s business largely depends on its “Un-carrier Value Proposition”, which aims to enhance customer satisfaction by means of providing the latest products at cheaper rates and uncomplicated terms of conditions. Its Ultra Capacity 5G network is powered by the mid-band 2.5 GHz spectrum. T-Mobile plans to reach 300 million people within 2023. The stock currently has an Earnings ESP of +3.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. The company is scheduled to report results on Jul 27.
T-Mobile US, Inc. Price and EPS Surprise
T-Mobile US, Inc. price-eps-surprise | T-Mobile US, Inc. Quote
Motorola Solutions, Inc. (MSI - Free Report) : Based in Chicago, IL, Motorola is a leading communications equipment manufacturer. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
As a leading provider of mission-critical communication products and services worldwide, Motorola has ensured a steady revenue stream from this niche market. The communications equipment maker intends to boost its position in the public safety domain by entering into strategic alliances with other players in the ecosystem. This Zacks Rank #2 stock has an Earnings ESP of +0.07%. The company is scheduled to report results on Aug 3.
Motorola Solutions, Inc. Price and EPS Surprise
Motorola Solutions, Inc. price-eps-surprise | Motorola Solutions, Inc. Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.