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Can Higher Communications Revenues Boost AT&T (T) Q2 Earnings?
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AT&T Inc. (T - Free Report) is scheduled to report second-quarter 2023 results on Jul 26, before the opening bell. In the second quarter, the Communications segment is likely to have recorded year-over-year higher revenues owing to a healthy momentum in the wireless business.
Factors at Play
The Communications segment has three business units — Mobility, Entertainment Group and Business Wireline.
In the second quarter, AT&T collaborated with Cisco to launch innovative solutions that enhance connectivity and advance the calling landscape for hybrid workforces. With the new offerings, businesses of any size can offer employees a simple, secure, consistent experience to thrive in any setting. Leveraging embedded security and analytics, enterprises can connect a user or device to any application in their multi-cloud for end-to-end visibility.
AT&T also collaborated with Trinity Cyber, Inc. to deliver an innovative, commercially managed cybersecurity solution to the U.S. Air Force. The Secure Internet Gateway is expected to greatly enhance cybersecurity protections and reduce risks for Air Force networks. Such initiatives are likely to get reflected in the upcoming results.
During the second 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 75% of its network footprint to 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. The extensive fiber footprint is expected to minimize its maintenance and repair costs while generating higher ARPU. This is likely to get reflected in the second-quarter results.
However, adverse foreign currency translations and high operating costs for 5G deployments are likely to have led to soft margins in the second quarter. Continuous infrastructure investments for fiber and 5G deployments might have weighed on the margins.
The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. AT&T is facing a steady decline in linear TV subscribers and legacy services. High-speed Internet revenues are also contracting due to the legacy Digital Subscriber Line decline, simplified pricing and bundle discount.
Our estimate for revenues from the Communications segment is pegged at $29,160.8 million, indicating an increase from $28,695 million reported in the year-ago quarter. Our estimate for operating income from the segment stands at $6,920.3 million, suggesting an improvement from $6,683 million.
Overall Expectations
The Zacks Consensus Estimate for total revenues of the company stands at $30,087 million, indicating growth from $29,643 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 60 cents per share. It had reported earnings of 65 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for AT&T for the second 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 +2.08%, with the former pegged at 62 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 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 +3.94% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 27.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +5.83% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 26.
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Can Higher Communications Revenues Boost AT&T (T) Q2 Earnings?
AT&T Inc. (T - Free Report) is scheduled to report second-quarter 2023 results on Jul 26, before the opening bell. In the second quarter, the Communications segment is likely to have recorded year-over-year higher revenues owing to a healthy momentum in the wireless business.
Factors at Play
The Communications segment has three business units — Mobility, Entertainment Group and Business Wireline.
In the second quarter, AT&T collaborated with Cisco to launch innovative solutions that enhance connectivity and advance the calling landscape for hybrid workforces. With the new offerings, businesses of any size can offer employees a simple, secure, consistent experience to thrive in any setting. Leveraging embedded security and analytics, enterprises can connect a user or device to any application in their multi-cloud for end-to-end visibility.
AT&T also collaborated with Trinity Cyber, Inc. to deliver an innovative, commercially managed cybersecurity solution to the U.S. Air Force. The Secure Internet Gateway is expected to greatly enhance cybersecurity protections and reduce risks for Air Force networks. Such initiatives are likely to get reflected in the upcoming results.
During the second 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 75% of its network footprint to 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. The extensive fiber footprint is expected to minimize its maintenance and repair costs while generating higher ARPU. This is likely to get reflected in the second-quarter results.
However, adverse foreign currency translations and high operating costs for 5G deployments are likely to have led to soft margins in the second quarter. Continuous infrastructure investments for fiber and 5G deployments might have weighed on the margins.
The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. AT&T is facing a steady decline in linear TV subscribers and legacy services. High-speed Internet revenues are also contracting due to the legacy Digital Subscriber Line decline, simplified pricing and bundle discount.
Our estimate for revenues from the Communications segment is pegged at $29,160.8 million, indicating an increase from $28,695 million reported in the year-ago quarter. Our estimate for operating income from the segment stands at $6,920.3 million, suggesting an improvement from $6,683 million.
Overall Expectations
The Zacks Consensus Estimate for total revenues of the company stands at $30,087 million, indicating growth from $29,643 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 60 cents per share. It had reported earnings of 65 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model predicts an earnings beat for AT&T for the second 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 +2.08%, with the former pegged at 62 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 have the right combination of elements to post an earnings beat this season:
Intel Corporation (INTC - Free Report) is set to release quarterly numbers on Jul 27. It has an Earnings ESP of +19.64% and a Zacks Rank #2. 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 +3.94% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 27.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +5.83% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Jul 26.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar