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Telecom Stocks Q1 Earnings Due May 6: What Awaits TMUS & CTL?
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The overall Technology sector, of which Telecom is an essential part, is likely to report soft first-quarter 2020 earnings. The sector is expected to have taken a hit due to the coronavirus pandemic, which disrupted normal business operations and supply-chain mechanisms of various telecom firms as they preferred to exercise caution and put on hold their delivery schedules to and from China and other countries like South Korea until the health risks are neutralized. This induced a ‘supply shock’ caused by factory shutdowns and travel restrictions sparked by the virus outbreak. This, in turn, affected the sector’s profitability and triggered insecurity within the industry. Sector revenues, particularly within the chip industry, are expected to have declined significantly as the market bore the brunt of the global lockdown.
Various trade restrictions on grounds of national security concerns further hampered the supply-chain mechanism of the companies and eroded sector margins. In addition, higher infrastructure investments are expected to have escalated operating costs as 5G deployments picked up pace across the United States.
Upfront investments in capital and wireless spectrum for 5G have proven to be substantially higher than prior generations of wireless deployments due to network density requirements, potentially hurting return of capital metrics. The potential for meaningful revenues to lag 5G buildouts poses significant credit risks for providers pursuing aggressive deployments. This has become all the more pronounced as the industry lacks any clarity on the actual impact of coronavirus on the business, forcing some companies to even withdraw guidance.
Technological advances have changed the way consumers communicate, resulting in higher home data consumption and video streaming, with digital sustainability being the norm of the day as countless people seek the refuge of the safety of their homes to prevent exposure to the virus. But the worldwide mayhem induced by the virus, intense competition and commoditization of services have limited the chances of benefiting from these trends.
Per the latest Earnings Preview, total earnings for the Technology sector for the March quarter are expected to be up 2.8% on 6.2% higher revenues year over year. This compares unfavorably with the prior quarter’s earnings growth of 5.9% on 5.6% revenue growth.
Let’s take a look at two Telecom stocks that are slated to report first-quarter 2020 results after the closing bell on May 6.
T-Mobile US, Inc. (TMUS - Free Report) : The Zacks Consensus Estimate for total revenues stands at $18,968 million, which indicates a rise of 71.2% from the year-ago quarter’s reported figure. The consensus mark for adjusted earnings per share is pegged at 74 cents, which calls for a decline of 36.8% from the prior-year quarter’s reported figure.
Our proven model does not predict an earnings beat for T-Mobile this time around. The absence of the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) decreases the odds of an earnings beat.
T-Mobile currently has an Earnings ESP of +4.35% and a Zacks Rank #5 (Strong Sell).
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
During the quarter under review, T-Mobile introduced GoTo, its new line of accessories with all the device essentials, giving customers price-right options for outfitting their phones and tablets. The company launched 5G in Lafayette, Charleston, Huntington, Jackson and Evansville. The company deployed an additional 600 MHz spectrum from multiple companies, doubling its total 600 MHz LTE capacity across the nation. This is helping T-Mobile, Metro by T-Mobile and partner customers stay connected during the COVID-19 pandemic. Investments to build a nationwide 4G LTE network, which covers more than 327 million U.S. citizens, are likely to have aided the company’s performance.
CenturyLink, Inc. : The Zacks Consensus Estimate for total revenues is pegged at $5,484 million, implying a decline of 2.9% from the year-ago quarter’s reported figure. The consensus mark for adjusted earnings per share is pegged at 36 cents, indicating an improvement of 5.9% from the prior-year quarter’s reported figure, driven by cost-cutting initiatives and operational efficiencies through several methods, including network simplification and rationalization.
CenturyLink has an Earnings ESP of +1.41% and a Zacks Rank #3.
Despite its sustained focus on infrastructure development for improving revenue trajectory in the long term, CenturyLink is likely to report lower revenues in the first quarter. This is due to a tough year-over-year comparison, as the company faced challenging macroeconomic conditions in the quarter, triggered by the coronavirus pandemic.
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Telecom Stocks Q1 Earnings Due May 6: What Awaits TMUS & CTL?
The overall Technology sector, of which Telecom is an essential part, is likely to report soft first-quarter 2020 earnings. The sector is expected to have taken a hit due to the coronavirus pandemic, which disrupted normal business operations and supply-chain mechanisms of various telecom firms as they preferred to exercise caution and put on hold their delivery schedules to and from China and other countries like South Korea until the health risks are neutralized. This induced a ‘supply shock’ caused by factory shutdowns and travel restrictions sparked by the virus outbreak. This, in turn, affected the sector’s profitability and triggered insecurity within the industry. Sector revenues, particularly within the chip industry, are expected to have declined significantly as the market bore the brunt of the global lockdown.
Various trade restrictions on grounds of national security concerns further hampered the supply-chain mechanism of the companies and eroded sector margins. In addition, higher infrastructure investments are expected to have escalated operating costs as 5G deployments picked up pace across the United States.
Upfront investments in capital and wireless spectrum for 5G have proven to be substantially higher than prior generations of wireless deployments due to network density requirements, potentially hurting return of capital metrics. The potential for meaningful revenues to lag 5G buildouts poses significant credit risks for providers pursuing aggressive deployments. This has become all the more pronounced as the industry lacks any clarity on the actual impact of coronavirus on the business, forcing some companies to even withdraw guidance.
Technological advances have changed the way consumers communicate, resulting in higher home data consumption and video streaming, with digital sustainability being the norm of the day as countless people seek the refuge of the safety of their homes to prevent exposure to the virus. But the worldwide mayhem induced by the virus, intense competition and commoditization of services have limited the chances of benefiting from these trends.
Per the latest Earnings Preview, total earnings for the Technology sector for the March quarter are expected to be up 2.8% on 6.2% higher revenues year over year. This compares unfavorably with the prior quarter’s earnings growth of 5.9% on 5.6% revenue growth.
Let’s take a look at two Telecom stocks that are slated to report first-quarter 2020 results after the closing bell on May 6.
T-Mobile US, Inc. (TMUS - Free Report) : The Zacks Consensus Estimate for total revenues stands at $18,968 million, which indicates a rise of 71.2% from the year-ago quarter’s reported figure. The consensus mark for adjusted earnings per share is pegged at 74 cents, which calls for a decline of 36.8% from the prior-year quarter’s reported figure.
Our proven model does not predict an earnings beat for T-Mobile this time around. The absence of the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) decreases the odds of an earnings beat.
T-Mobile currently has an Earnings ESP of +4.35% and a Zacks Rank #5 (Strong Sell).
T-Mobile US, Inc. Price and EPS Surprise
T-Mobile US, Inc. price-eps-surprise | T-Mobile US, Inc. Quote
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
During the quarter under review, T-Mobile introduced GoTo, its new line of accessories with all the device essentials, giving customers price-right options for outfitting their phones and tablets. The company launched 5G in Lafayette, Charleston, Huntington, Jackson and Evansville. The company deployed an additional 600 MHz spectrum from multiple companies, doubling its total 600 MHz LTE capacity across the nation. This is helping T-Mobile, Metro by T-Mobile and partner customers stay connected during the COVID-19 pandemic. Investments to build a nationwide 4G LTE network, which covers more than 327 million U.S. citizens, are likely to have aided the company’s performance.
CenturyLink, Inc. : The Zacks Consensus Estimate for total revenues is pegged at $5,484 million, implying a decline of 2.9% from the year-ago quarter’s reported figure. The consensus mark for adjusted earnings per share is pegged at 36 cents, indicating an improvement of 5.9% from the prior-year quarter’s reported figure, driven by cost-cutting initiatives and operational efficiencies through several methods, including network simplification and rationalization.
CenturyLink has an Earnings ESP of +1.41% and a Zacks Rank #3.
CenturyLink, Inc. Price and EPS Surprise
CenturyLink, Inc. price-eps-surprise | CenturyLink, Inc. Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
Despite its sustained focus on infrastructure development for improving revenue trajectory in the long term, CenturyLink is likely to report lower revenues in the first quarter. This is due to a tough year-over-year comparison, as the company faced challenging macroeconomic conditions in the quarter, triggered by the coronavirus pandemic.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>