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Will Modest Top-Line Growth Aid Q3 Earnings of AT&T (T)?
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AT&T Inc. (T - Free Report) is scheduled to report third-quarter 2023 results on Oct 19, before the opening bell. In the last reported quarter, the adjusted earnings beat the Zacks Consensus Estimate by 3 cents. The company is expected to have witnessed a top-line improvement year over year on healthy wireless traction, driven by steady investments for 5G expansion and fiber broadband infrastructure development.
Factors at Play
During the third quarter, AT&T continued to expand its 5G network coverage in rural and urban areas nationwide. It is heavily investing in enhancing network capacity and improving the resiliency of the existing infrastructure. AT&T expects to deploy mid-band spectrum to 200 million users by year-end 2023 and reach more than 30 million customer and business locations with fiber by the end of 2025. The extensive fiber footprint is likely to minimize its maintenance and repair costs while generating higher ARPU. Moreover, higher fiber penetrations in hitherto underserved markets are likely to be reflected in the third-quarter results.
With a disciplined and sustainable go-to-market strategy, AT&T is likely to have witnessed solid postpaid phone additions backed by healthy demand trends and improved quality of service. In addition, the convergence of scaled wireless and fiber networks is likely to have yielded economic benefits with multiple services under a single platform – 5G, fiber and fixed wireless access.
In the third quarter, AT&T collaborated with Deloitte to improve ESG (Environmental, Social and Governance) data collection for sustainable business operations. Leveraging enhanced data sharing speed through 5G network connectivity, AT&T's IoT sensor technology will enable firms to better track emissions and augment the efficacies of emissions reporting. This is likely to have translated into incremental revenues in the upcoming quarter.
In the third quarter, AT&T also collaborated with Boldyn Networks to provide expanded coverage for the San Francisco Municipal Transportation Agency (“SFMTA”), offering improved wireless connectivity for millions of passengers in the region. The partnership aims to enhance seamless and robust 5G coverage across SFMTA's infrastructure, including tunnels, stations, rail cars and surrounding areas. These initiatives are likely to have had a favorable effect on the company’s third-quarter performance.
Our estimate for revenues from the Communications segment is pegged at $29,590.7 million, while that from the Latin America segment is $897.3 million.
However, AT&T is facing stiff competition in the wireless market from other major carriers that are aggressively expanding their networks and improving their offerings. Consumer’s tendency to switch to various streaming services is hurting company’s top line. It also has a large debt burden, which dents its competitiveness and limits growth potential. In addition, a challenging macroeconomic environment, inflationary pressures and business uncertainty are forcing consumers to have a conservative approach to higher-tier services.
The Zacks Consensus Estimate for total revenues is pegged at $30,202 million, indicating a rise from $30,043 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 63 cents per share. It had reported earnings of 68 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 exactly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.54%, with the former pegged at 65 cents and the latter at 63 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 Silicon Motion Technology Corporation (SIMO - Free Report) is +3.00% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 1.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +1.24% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 25.
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Will Modest Top-Line Growth Aid Q3 Earnings of AT&T (T)?
AT&T Inc. (T - Free Report) is scheduled to report third-quarter 2023 results on Oct 19, before the opening bell. In the last reported quarter, the adjusted earnings beat the Zacks Consensus Estimate by 3 cents. The company is expected to have witnessed a top-line improvement year over year on healthy wireless traction, driven by steady investments for 5G expansion and fiber broadband infrastructure development.
Factors at Play
During the third quarter, AT&T continued to expand its 5G network coverage in rural and urban areas nationwide. It is heavily investing in enhancing network capacity and improving the resiliency of the existing infrastructure. AT&T expects to deploy mid-band spectrum to 200 million users by year-end 2023 and reach more than 30 million customer and business locations with fiber by the end of 2025. The extensive fiber footprint is likely to minimize its maintenance and repair costs while generating higher ARPU. Moreover, higher fiber penetrations in hitherto underserved markets are likely to be reflected in the third-quarter results.
With a disciplined and sustainable go-to-market strategy, AT&T is likely to have witnessed solid postpaid phone additions backed by healthy demand trends and improved quality of service. In addition, the convergence of scaled wireless and fiber networks is likely to have yielded economic benefits with multiple services under a single platform – 5G, fiber and fixed wireless access.
In the third quarter, AT&T collaborated with Deloitte to improve ESG (Environmental, Social and Governance) data collection for sustainable business operations. Leveraging enhanced data sharing speed through 5G network connectivity, AT&T's IoT sensor technology will enable firms to better track emissions and augment the efficacies of emissions reporting. This is likely to have translated into incremental revenues in the upcoming quarter.
In the third quarter, AT&T also collaborated with Boldyn Networks to provide expanded coverage for the San Francisco Municipal Transportation Agency (“SFMTA”), offering improved wireless connectivity for millions of passengers in the region. The partnership aims to enhance seamless and robust 5G coverage across SFMTA's infrastructure, including tunnels, stations, rail cars and surrounding areas. These initiatives are likely to have had a favorable effect on the company’s third-quarter performance.
Our estimate for revenues from the Communications segment is pegged at $29,590.7 million, while that from the Latin America segment is $897.3 million.
However, AT&T is facing stiff competition in the wireless market from other major carriers that are aggressively expanding their networks and improving their offerings. Consumer’s tendency to switch to various streaming services is hurting company’s top line. It also has a large debt burden, which dents its competitiveness and limits growth potential. In addition, a challenging macroeconomic environment, inflationary pressures and business uncertainty are forcing consumers to have a conservative approach to higher-tier services.
The Zacks Consensus Estimate for total revenues is pegged at $30,202 million, indicating a rise from $30,043 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 63 cents per share. It had reported earnings of 68 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 exactly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +3.54%, with the former pegged at 65 cents and the latter at 63 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:
Intel Corporation (INTC - Free Report) is set to release quarterly numbers on Oct 26. It has an Earnings ESP of +8.98% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Silicon Motion Technology Corporation (SIMO - Free Report) is +3.00% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 1.
The Earnings ESP for Meta Platforms, Inc. (META - Free Report) is +1.24% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Oct 25.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.