We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Telecom Stocks Likely to Top Q2 Earnings on Growth Trends
Read MoreHide Full Article
The U.S. telecommunications industry is on the cusp of a digital revolution as leading carriers plan to introduce 5G technology in select cities across the country by the end of 2018. In addition, President Donald Trump's pro-growth policy changes, namely, significant cut in corporate tax and deregulation remain major catalysts to the overall industry growth.
The reduction in corporate tax rate from 35% to 20% has mostly been accretive to cash flow and has resulted in a huge windfall for telecom operators. The carriers have largely utilized this money for 5G network R&D and its deployment. Moreover, the telecom industry is highly capital-intensive in nature. Therefore, the immediate expensing of investment in all tangible, intangible and real property (other than land) has significantly benefited telecom carriers.
Factors at Play: 5G Race Gets Heated Up
5G is billed as the technology of the future with faster download speed and seamless transfer of data. Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation Internet of Things (IoT) services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals.
According to data from research firm, IHS Markit, 5G is expected to enable $12.3 trillion of global economic output by 2035. Consequently, U.S. telecom firms are quietly moving ahead with plans to launch 5G services by undergoing trials and deploying fiber optic networks.
IoT Market on the Ascent
IoT is a network of physical objects embedded with electronics, software, sensors and connectivity that facilitates it to achieve greater value and service through seamless data transfer with other connected devices. Superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of IoT.
Moreover, 5G technology is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT. With emergence of smart cities, connected vehicles and connected homes, 2018 promises to be a marquee year for telecom carriers.
Digital Advertisements More Immersive & Engaging
Telecom carriers are increasingly introducing novel opportunities for brands to engage with consumers through extended reality (XR) ad experiences. XR is a combination of real and virtual world and human-machine interaction. XR includes Virtual Reality, Augmented Reality and newly-developed immersive technologies to connect and engage customers at more meaningful levels.
These premium ad innovations entail combining the art of brand building and the science of data, new 3D advertisement formats and first-in-market programmatic VR ads. With these ad formats, the telecom operators are using brand advertising intelligence to help marketers build emotional connections with their customers through interactive experience, allowing them to explore objects and make informed decisions.
Telecom Sector Performance
About 25.7% of the total S&P 500 companies reported their earnings results through Jul 20, 2018. With a ‘beat ratio’ of 86.2%, total earnings for these companies are up 20.9% year over year. Revenues increased 10.3% from the year-ago period with a ‘beat ratio’ of 77%.
The Technology sector, of which Telecom is part, appears to be quite strong. For the sector, earnings are expected to improve 24.5% year over year while revenues are touted to rise 11.4% due to healthy growth dynamics on the back of existing secular trends in cloud computing, artificial intelligence and Big Data.
Given the forecast, it might be a good idea to zero in on a handful of Telecom stocks that are poised to beat earnings estimates this quarter. An earnings surprise should help these stocks outperform in the near term.Solid earnings results of the telecom sector could sow the seeds for future investments in network and 5G-enabled devices for superior 5G readiness.
How to Pick?
Amid a diverse range of companies in the Telecom sector, picking the right stock for your portfolio could appear to be a colossal task. An easy way to narrow the list is by choosing stocks that have a favorable Zacks Rank and a positive Earnings ESP with the help of the Zacks Stock Screener.
Earnings ESP is our proprietary methodology for determining which stocks have the best chances to surprise in their next earnings announcement. The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
The combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) and a positive Earnings ESP is usually an indicator of a likely earnings beat.
We have mentioned four Telecom stocks below which match these criteria, and thus may be potential winners in second-quarter earnings.
Windstream Holdings, Inc.: Headquartered in Little Rock, AR, Windstream is one of the largest U.S. rural local exchange carriers, primarily operating in rural communities in the southern and south-western parts of the United States. The company offers data networking, security, unified communications and managed services to mid-market, enterprise and wholesale customers across the country.
This Zacks Rank #2 stock has an Earnings ESP of +12.15%. The company is scheduled to report results before the market opens on Aug 9.
Frontier Communications Corporation: Based in Stamford, CT, Frontier provides communication services to rural areas and small and medium-sized towns and cities. It offers voice, high-speed Internet, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications access solutions for medium and large businesses.
Frontier currently carries a Zacks Rank #2 and has an Earnings ESP of +14.11%. The company is slated to report results after the closing bell on Jul 31.
Motorola Solutions, Inc.(MSI - Free Report) : Based in Schaumburg, IL, Motorola is a leading communications equipment manufacturer and has strong market position in bar code scanning, wireless infrastructure gear and government communications. The company generally provides services and solutions to the government segments and public safety programs together with large enterprises and wireless infrastructure service providers.
The company has a long-term earnings growth expectation of 8%. Motorolacurrently carries a Zacks Rank #2 along with an Earnings ESP of +1.33%. The company is slated to report results after the market closes on Aug 2.
Cincinnati Bell Inc.: Based in Cincinnati, OH, Cincinnati Bell is a full-service regional provider of data and voice communications services over wireline and wireless networks, a full-service provider of data center colocation and related managed services. The company also provides business customers with outsourced data center colocation operations and related managed services in world class, state-of-the-art data center facilities.
This Zacks Rank #3 stock has an Earnings ESP of +46.15%. The company is scheduled to report results before the market opens on Aug 8.
Moving Forward
As the second-quarter earnings picture looks quite promising driven by a resilient economy, betting on some possible outperformers backed by a solid Zacks Rank and a positive Earnings ESP could be a great idea for investors.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
4 Telecom Stocks Likely to Top Q2 Earnings on Growth Trends
The U.S. telecommunications industry is on the cusp of a digital revolution as leading carriers plan to introduce 5G technology in select cities across the country by the end of 2018. In addition, President Donald Trump's pro-growth policy changes, namely, significant cut in corporate tax and deregulation remain major catalysts to the overall industry growth.
The reduction in corporate tax rate from 35% to 20% has mostly been accretive to cash flow and has resulted in a huge windfall for telecom operators. The carriers have largely utilized this money for 5G network R&D and its deployment. Moreover, the telecom industry is highly capital-intensive in nature. Therefore, the immediate expensing of investment in all tangible, intangible and real property (other than land) has significantly benefited telecom carriers.
Factors at Play: 5G Race Gets Heated Up
5G is billed as the technology of the future with faster download speed and seamless transfer of data. Leveraging state-of-the-art communication network architectures, 5G is touted to be the primary catalyst for next-generation Internet of Things (IoT) services. These include connected cars coupled with augmented reality and virtual reality platform, smart cities and connected devices that revolutionize key industry verticals.
According to data from research firm, IHS Markit, 5G is expected to enable $12.3 trillion of global economic output by 2035. Consequently, U.S. telecom firms are quietly moving ahead with plans to launch 5G services by undergoing trials and deploying fiber optic networks.
IoT Market on the Ascent
IoT is a network of physical objects embedded with electronics, software, sensors and connectivity that facilitates it to achieve greater value and service through seamless data transfer with other connected devices. Superfast 5G mobile networks will be of utmost necessity in managing the exponential growth of IoT.
Moreover, 5G technology is likely to augment the scalability, security and universal mobility of the telecommunications industry, which is expected to propel the wide proliferation of IoT. With emergence of smart cities, connected vehicles and connected homes, 2018 promises to be a marquee year for telecom carriers.
Digital Advertisements More Immersive & Engaging
Telecom carriers are increasingly introducing novel opportunities for brands to engage with consumers through extended reality (XR) ad experiences. XR is a combination of real and virtual world and human-machine interaction. XR includes Virtual Reality, Augmented Reality and newly-developed immersive technologies to connect and engage customers at more meaningful levels.
These premium ad innovations entail combining the art of brand building and the science of data, new 3D advertisement formats and first-in-market programmatic VR ads. With these ad formats, the telecom operators are using brand advertising intelligence to help marketers build emotional connections with their customers through interactive experience, allowing them to explore objects and make informed decisions.
Telecom Sector Performance
About 25.7% of the total S&P 500 companies reported their earnings results through Jul 20, 2018. With a ‘beat ratio’ of 86.2%, total earnings for these companies are up 20.9% year over year. Revenues increased 10.3% from the year-ago period with a ‘beat ratio’ of 77%.
The Technology sector, of which Telecom is part, appears to be quite strong. For the sector, earnings are expected to improve 24.5% year over year while revenues are touted to rise 11.4% due to healthy growth dynamics on the back of existing secular trends in cloud computing, artificial intelligence and Big Data.
Given the forecast, it might be a good idea to zero in on a handful of Telecom stocks that are poised to beat earnings estimates this quarter. An earnings surprise should help these stocks outperform in the near term.Solid earnings results of the telecom sector could sow the seeds for future investments in network and 5G-enabled devices for superior 5G readiness.
How to Pick?
Amid a diverse range of companies in the Telecom sector, picking the right stock for your portfolio could appear to be a colossal task. An easy way to narrow the list is by choosing stocks that have a favorable Zacks Rank and a positive Earnings ESP with the help of the Zacks Stock Screener.
Earnings ESP is our proprietary methodology for determining which stocks have the best chances to surprise in their next earnings announcement. The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
The combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) and a positive Earnings ESP is usually an indicator of a likely earnings beat.
We have mentioned four Telecom stocks below which match these criteria, and thus may be potential winners in second-quarter earnings.
Windstream Holdings, Inc.: Headquartered in Little Rock, AR, Windstream is one of the largest U.S. rural local exchange carriers, primarily operating in rural communities in the southern and south-western parts of the United States. The company offers data networking, security, unified communications and managed services to mid-market, enterprise and wholesale customers across the country.
This Zacks Rank #2 stock has an Earnings ESP of +12.15%. The company is scheduled to report results before the market opens on Aug 9.
Frontier Communications Corporation: Based in Stamford, CT, Frontier provides communication services to rural areas and small and medium-sized towns and cities. It offers voice, high-speed Internet, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications access solutions for medium and large businesses.
Frontier currently carries a Zacks Rank #2 and has an Earnings ESP of +14.11%. The company is slated to report results after the closing bell on Jul 31.
Motorola Solutions, Inc.(MSI - Free Report) : Based in Schaumburg, IL, Motorola is a leading communications equipment manufacturer and has strong market position in bar code scanning, wireless infrastructure gear and government communications. The company generally provides services and solutions to the government segments and public safety programs together with large enterprises and wireless infrastructure service providers.
The company has a long-term earnings growth expectation of 8%. Motorolacurrently carries a Zacks Rank #2 along with an Earnings ESP of +1.33%. The company is slated to report results after the market closes on Aug 2.
Cincinnati Bell Inc.: Based in Cincinnati, OH, Cincinnati Bell is a full-service regional provider of data and voice communications services over wireline and wireless networks, a full-service provider of data center colocation and related managed services. The company also provides business customers with outsourced data center colocation operations and related managed services in world class, state-of-the-art data center facilities.
This Zacks Rank #3 stock has an Earnings ESP of +46.15%. The company is scheduled to report results before the market opens on Aug 8.
Moving Forward
As the second-quarter earnings picture looks quite promising driven by a resilient economy, betting on some possible outperformers backed by a solid Zacks Rank and a positive Earnings ESP could be a great idea for investors.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>