More than a month has gone by since the last earnings report for Sprint Corporation (S - Free Report) . Shares have lost about 12.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Sprint Betters Estimates in Q1 Earnings, Revenues Miss
Sprint's first-quarter 2017 net income was $206 million or $0.05 per share compared with a net loss of $302 million or $0.08 cents in the year-ago quarter. Moreover, first-quarter net income of $0.05 cents compared favorably with the Zacks Consensus Estimate of a loss of a penny. The bottom line grew 183.33% on a year-over-year basis.
Quarterly total revenue came in at $8,157 million, up 1.81% year over year but below the Zacks Consensus Estimate of $8,191 million. Service revenues were $6,071 million, down 6.83%. Equipment revenues totaled $2,086 million, surging 39.44%.
Operating expenses were $6,994 million compared with $7,651 million in the year-ago quarter. Operating income was $1,163 million compared with $361 million in the year-ago period. Adjusted EBITDA improved 16.1% year over year to $2,853 million. Adjusted EBITDA margin was 47.0% compared with 37.7% in the prior-year quarter.
In the first quarter of 2017, Sprint generated $1,280 million of cash from operations compared with $542 million in the prior-year quarter. Quarterly free cash flow was $239 million compared with $466 million in the year-ago quarter.
At the end of Jun 30, Sprint had $2,478 million of cash and marketable securities compared with $2,870 million at the end of Mar 2017 and $3,780 million at the end of Jun 2016. Total debt outstanding was $34,459 million, compared with $35,878 million at the end of Mar 2017.
Total segment revenue was $7,810 million, up 6.7% year over year. Postpaid revenues totaled $4,466 million, down 6.53%. Prepaid revenues were $999 million, declining 6.98%. Wholesale revenues were $259 million, up 4%. Equipment revenues totaled $2,086 million, up a substantial 39.4%.
Operating income was $1,178 million compared with $395 million in the year-ago period. Adjusted EBITDA margin was 50.1% compared with 40.0% in the prior-year quarter.
Segment revenues were $433 million, down 20.6% year over year. Voice revenues totaled $124 million, down 31.5%. Data revenues were $34 million, down 20.9%. Internet revenues were $255 million, down 15.6%. Other revenues were $20 million, up 5.26% year over year.
Operating income was a loss of $67 million compared with a loss of $30 million in the year-ago period. Adjusted EBITDA margin was a negative 2.5% as against a positive 3.5% in the prior-year quarter.
In the reported quarter, Sprint witnessed net additions of 61,000 wireless customers, including postpaid net losses of 39,000, prepaid net additions of 35,000, and wholesale and affiliate net additions of 65,000. Sprint's focus on delivering the most attractive value proposition in wireless resulted in 88,000 postpaid phone net additions in the quarter, marking the eighth consecutive quarter of net additions.
As of Jun 30, 2017, Sprint had 53.698 million wireless connections, up 0.63% year over year. This includes 31.518 million postpaid, 8.719 million prepaid and 13.461 million wholesale customers.
Quarterly total retail postpaid churn rate was 1.65% compared with 1.56% in the year-ago quarter. Total retail prepaid churn rate was 4.57% versus 5.39% in the year-ago quarter. Postpaid phone churn was 1.50% as against 1.39% in the prior-year quarter. Total retail postpaid ARPU (average revenue per user) was $47.30 versus $51.54 in the year-ago quarter. Total retail prepaid ARPU was $38.24 versus $33.00 in the year-ago period.
Fiscal 2017 Outlook
For full-year 2017, Sprint has raised its outlook. The company expects fiscal 2017 adjusted EBITDA of $10.8 billion to $11.2 billion compared with the previous expectation of $10.7 billion to $11.2 billion. Sprint anticipates operating income of $2.1 billion to $2.5 billion versus previous expectation of $2 billion to $2.5 billion. Capital expenditures will be approximately $3.5 billion to $4 billion, which is similar to the previous expectation.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last month as none of them issued any earnings estimate revisions.
At this time, Sprint's stock has a nice Growth Score of B, though it lags a bit on the momentum front with a C. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth, investors, while also being suitable for those looking for momentum.
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.