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Telecom Stock Roundup: CenturyLink Earnings, QUALCOMM Settlement & More
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In the past five trading days, telecom stocks started trading on a positive note but eventually witnessed a steady decline as the lira crisis in Turkey rattled the global market. However, the stocks gained some lost ground by the end of the week as China decided to initiate low level trade talks with the United States in late August to set the ball rolling for further such negotiations between the two countries involved in a trade war.
As President Trump decided to double the tariff on its long-time NATO ally, raising the levies on Turkish steel and aluminum from 20% to 50%, the lira went for a free fall and depreciated against major currencies, including the U.S. dollar. This had a rippling effect across global equity markets as investors began to worry about surging Turkish debt levels and its ability to repay. In a retaliatory move, Turkey’s President called for the boycott of all U.S. electronic products and gadgets, which could hit the telecom stocks in future if the friction continues to escalate.
Amid such a discord, China announced that it will send Vice Commerce Minister Wang Shouwen to the United States in late August to initiate trade talks at the lower rungs — the first official exchange in two months — that showed signs of possible patch-up of the trade hostilities between the nations. The strategic move could be a result of the continued decline in China’s equity markets and a losing streak for the yuan. Although it is too early to predict any favorable outcome for the trade impasse, it surely is encouraging news for the overall technology industry in general and telecom sector in particular.
Regarding company-specific news, quarterly earnings, dividend increase and lawsuit settlements took the center stage over the last five trading days.
Recap of the Week’s Most Important Stories
1. CenturyLink, Inc. reported mixed second-quarter 2018 results wherein the top line missed the Zacks Consensus Estimate but the bottom line surpassed the same.
Net income for the reported quarter was $292 million or 27 cents per share compared with $17 million or 3 cents per share in the year-ago quarter. The year-over-year increase was primarily attributable to higher revenues and income tax benefit. Adjusted net income came in at $282 million or 26 cents per share compared with $131 million or 24 cents per share in the year-ago quarter and beat the Zacks Consensus Estimate by 3 cents. Quarterly operating revenues increased 44.3% year over year to $5,902 million driven by incremental revenues from Level 3. The top line, however, lagged the Zacks Consensus Estimate of $5,930 million. (Read more: CenturyLink Beats Q2 Earnings Estimates, Ups Guidance)
2. Windstream Holdings, Inc. reported lackluster second-quarter 2018 results with lower revenues and wider losses on a year-over-year basis.
For the second quarter, the company incurred a net loss of $93.7 million or a loss of $2.30 per share compared with a net loss of $68.1 million or a loss of $1.83 per share in the year-ago quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of $2.74. Quarterly total revenues decreased 3% year over year to $1,444.4 million. The top line, however, surpassed the Zacks Consensus Estimate of $1,440 million. (Read more: Windstream Q2 Loss Narrower Than Estimated, Sales Fall)
3. QUALCOMM Incorporated (QCOM - Free Report) announced that it has reached a settlement with the Taiwan Fair Trade Commission in an anti-trust case for about $93 million to safeguard its patent-licensing business.
QUALCOMM has agreed to invest $700 million in Taiwan over the next five years. It will have to provide reports every six months to Taiwanese officials for five years to show that it is negotiating in good faith with handset makers in patent-licensing deals. (Read more: QUALCOMM Settles Anti-Trust Dispute With Taiwan Regulators)
4. Badger Meter, Inc. (BMI - Free Report) announced a 15.4% year-over-year hike in its quarterly dividend payout. The proposed dividend of 15 cents per share or 60 cents on an annualized basis is payable Sep 14, 2018 to shareholders of record as on Aug 31.
This is the 26th consecutive year of dividend increase for Badger Meter. The dividend per share of the company has witnessed a CAGR of 11.2% from 2007-2017. The current hike reflects the inherent financial strength of the company and strong cash flow generated from continued focus on high-margin businesses and a healthy execution of operating plans. (Read more: Badger Meter Rewards Shareholders With 15% Dividend Hike)
5. Viasat Inc. (VSAT - Free Report) reported better-than-expected results in the first quarter of fiscal 2019.
Non-GAAP net loss was $17.5 million or a loss of 30 cents per share against net income of $2.5 million or 4 cents in the year-earlier quarter. Notably, adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 36 cents. Quarterly total revenues increased 15.5% year over year to $438.9 million, primarily driven by strong performance in its all three segments. The top line surpassed the Zacks Consensus Estimate of $435.05 million. (Read more: Viasat Q1 Loss Narrower Than Expected, Revenues Rise)
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and during the past six months.
In the past five trading days, Verizon Communications Inc. (VZ - Free Report) was the major gainer with the share price increasing 1%. SBA Communications Corporation (SBAC - Free Report) was the major decliner with its stock losing 1.4%.
Over the past six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 11.9% while AT&T Inc. (T - Free Report) declined the most with its shares falling 14.4%.
Over the past six months, the Zacks Telecommunications Services industry has recorded an average fall of 4.9% while the benchmark S&P 500 Index has gained 4.2%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to how the telecom sector braces itself for the impact of the trade war.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Telecom Stock Roundup: CenturyLink Earnings, QUALCOMM Settlement & More
In the past five trading days, telecom stocks started trading on a positive note but eventually witnessed a steady decline as the lira crisis in Turkey rattled the global market. However, the stocks gained some lost ground by the end of the week as China decided to initiate low level trade talks with the United States in late August to set the ball rolling for further such negotiations between the two countries involved in a trade war.
As President Trump decided to double the tariff on its long-time NATO ally, raising the levies on Turkish steel and aluminum from 20% to 50%, the lira went for a free fall and depreciated against major currencies, including the U.S. dollar. This had a rippling effect across global equity markets as investors began to worry about surging Turkish debt levels and its ability to repay. In a retaliatory move, Turkey’s President called for the boycott of all U.S. electronic products and gadgets, which could hit the telecom stocks in future if the friction continues to escalate.
Amid such a discord, China announced that it will send Vice Commerce Minister Wang Shouwen to the United States in late August to initiate trade talks at the lower rungs — the first official exchange in two months — that showed signs of possible patch-up of the trade hostilities between the nations. The strategic move could be a result of the continued decline in China’s equity markets and a losing streak for the yuan. Although it is too early to predict any favorable outcome for the trade impasse, it surely is encouraging news for the overall technology industry in general and telecom sector in particular.
Regarding company-specific news, quarterly earnings, dividend increase and lawsuit settlements took the center stage over the last five trading days.
Recap of the Week’s Most Important Stories
1. CenturyLink, Inc. reported mixed second-quarter 2018 results wherein the top line missed the Zacks Consensus Estimate but the bottom line surpassed the same.
Net income for the reported quarter was $292 million or 27 cents per share compared with $17 million or 3 cents per share in the year-ago quarter. The year-over-year increase was primarily attributable to higher revenues and income tax benefit. Adjusted net income came in at $282 million or 26 cents per share compared with $131 million or 24 cents per share in the year-ago quarter and beat the Zacks Consensus Estimate by 3 cents. Quarterly operating revenues increased 44.3% year over year to $5,902 million driven by incremental revenues from Level 3. The top line, however, lagged the Zacks Consensus Estimate of $5,930 million. (Read more: CenturyLink Beats Q2 Earnings Estimates, Ups Guidance)
2. Windstream Holdings, Inc. reported lackluster second-quarter 2018 results with lower revenues and wider losses on a year-over-year basis.
For the second quarter, the company incurred a net loss of $93.7 million or a loss of $2.30 per share compared with a net loss of $68.1 million or a loss of $1.83 per share in the year-ago quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of $2.74. Quarterly total revenues decreased 3% year over year to $1,444.4 million. The top line, however, surpassed the Zacks Consensus Estimate of $1,440 million. (Read more: Windstream Q2 Loss Narrower Than Estimated, Sales Fall)
3. QUALCOMM Incorporated (QCOM - Free Report) announced that it has reached a settlement with the Taiwan Fair Trade Commission in an anti-trust case for about $93 million to safeguard its patent-licensing business.
QUALCOMM has agreed to invest $700 million in Taiwan over the next five years. It will have to provide reports every six months to Taiwanese officials for five years to show that it is negotiating in good faith with handset makers in patent-licensing deals. (Read more: QUALCOMM Settles Anti-Trust Dispute With Taiwan Regulators)
4. Badger Meter, Inc. (BMI - Free Report) announced a 15.4% year-over-year hike in its quarterly dividend payout. The proposed dividend of 15 cents per share or 60 cents on an annualized basis is payable Sep 14, 2018 to shareholders of record as on Aug 31.
This is the 26th consecutive year of dividend increase for Badger Meter. The dividend per share of the company has witnessed a CAGR of 11.2% from 2007-2017. The current hike reflects the inherent financial strength of the company and strong cash flow generated from continued focus on high-margin businesses and a healthy execution of operating plans. (Read more: Badger Meter Rewards Shareholders With 15% Dividend Hike)
5. Viasat Inc. (VSAT - Free Report) reported better-than-expected results in the first quarter of fiscal 2019.
Non-GAAP net loss was $17.5 million or a loss of 30 cents per share against net income of $2.5 million or 4 cents in the year-earlier quarter. Notably, adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 36 cents. Quarterly total revenues increased 15.5% year over year to $438.9 million, primarily driven by strong performance in its all three segments. The top line surpassed the Zacks Consensus Estimate of $435.05 million. (Read more: Viasat Q1 Loss Narrower Than Expected, Revenues Rise)
Price Performance
The following table shows the price movement of some of the major telecom stocks over the past week and during the past six months.
In the past five trading days, Verizon Communications Inc. (VZ - Free Report) was the major gainer with the share price increasing 1%. SBA Communications Corporation (SBAC - Free Report) was the major decliner with its stock losing 1.4%.
Over the past six months, Motorola Solutions, Inc. (MSI - Free Report) was the best performer with its stock appreciating 11.9% while AT&T Inc. (T - Free Report) declined the most with its shares falling 14.4%.
Over the past six months, the Zacks Telecommunications Services industry has recorded an average fall of 4.9% while the benchmark S&P 500 Index has gained 4.2%.
What’s Next in the Telecom Space?
In addition to continued product launches and deployment of 5G technologies, all eyes will remain glued to how the telecom sector braces itself for the impact of the trade war.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>