Will Lower Latin America Revenues Dent AT&T (T) Q4 Earnings?
AT&T Inc. T is scheduled to report fourth-quarter 2022 results, before the opening bell, on Jan 25. In the fourth quarter, the Latin America segment is likely to have recorded year-over-year lower revenues owing to a challenging macroeconomic environment and rising inflationary pressures.
Factors at Play
The Latin America segment comprises wireless services and equipment in Mexico.
In the fourth quarter, AT&T continued to expand its 5G network infrastructure and expected to cover about 25 cities in Mexico with 5G service by the end of 2022. The company continued to offer Unlimited Plans with multiple lines to mix and match along with seamless data connectivity and high-speed, low-latency communication network facilities. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T inked an agreement with Amdocs to migrate its infrastructure to the public cloud. Per the deal, Amdocs Customer Experience Suite will migrate from AT&T Mexico on-premise to the cloud for improved flexibility and greater capacity to accommodate new initiatives for 5G expansion. This is likely to have translated into higher revenues for the company.
However, adverse foreign currency translations and high operating costs for 5G deployments are likely to have led to soft margins in the quarter. Continuous infrastructure investments for 5G deployments are expected to have weighed on the margins. In addition, AT&T is reportedly relinquishing spectrum in Mexico for high operational and usage costs. A challenging macroeconomic environment is also expected to have hurt the top line.
Overall Expectations
The Zacks Consensus Estimate for revenues from the Latin America segment is pegged at $801 million, indicating a decline from $1,063 million reported in the year-ago quarter. The consensus mark for EBITDA from the segment stands at $92 million, suggesting a rise from $74 million recorded a year ago.
The Zacks Consensus Estimate for total revenues of the company stands at $31,411 million, indicating a decline from $40,958 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 59 cents per share. It had reported earnings of 78 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T for the fourth 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 not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -5.98%, with the former pegged at 55 cents and the latter at 59 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.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Verizon Communications Inc. VZ is set to release quarterly numbers on Feb 24. It has an Earnings ESP of +0.42% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for T-Mobile US, Inc. TMUS is +3.00% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
The Earnings ESP for Meta Platforms, Inc. META is +10.48% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 1.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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