Telecom Stock Roundup: Verizon, AT&T, Juniper, Corning Report Q3 Earnings & More
In the past five trading days, telecom stocks maintained a roller-coaster ride and eventually declined at the end of the week on broader macroeconomic factors. As the earnings season gains steam, equity markets appear a bit shaky with high volatility despite solid performance from the technology sector, of which telecom is part.
The benchmark S&P 500 Index continued its downtrend throughout the past week on broader sell-off, apprehension of Fed hike in the imminent future and global macroeconomic woes, with the technology sector taking the hardest hit as strong corporate earnings failed to soothe investor nerves. In addition, the unrelenting trade war tensions with China appear to dent the long-term profitability of the telecom firms. All these macroeconomic headwinds are likely to hold down the sector positives and mar the healthy growth momentum.
Regarding company-specific news, earnings of sector heavyweights and product launches took the center stage over the past five trading days.
Recap of the Week’s Most Important Stories
1. Verizon Communications Inc. VZ continued its solid performance in third-quarter 2018, primarily led by the wireless business. The company recorded healthy top-line growth led by solid service revenues and remains well poised to benefit from the 5G era. The bottom line also benefited from significant savings from the tax reform.
Adjusted earnings were $1.22 per share compared with 98 cents in the year-earlier quarter and comfortably exceeded the Zacks Consensus Estimate of $1.19. Consolidated GAAP revenues increased 2.8% year over year to $32,607 million on the back of a solid performance in the wireless business and exceeded the Zacks Consensus Estimate of $32,542 million. Operating income improved 9.8% to $7,675 million despite slightly higher operating expenses. (Read more: Verizon Q3 Earnings Beat Estimates on Wireless Traction)
2. AT&T Inc. T reported solid third-quarter 2018 results with year-over-year increase in the top line with solid wireless performance including postpaid phone gains, strong prepaid phone growth and accretive WarnerMedia contribution. The company also recorded healthy improvement in GAAP earnings, although recurring earnings for the quarter failed to beat the Zacks Consensus Estimate.
Adjusted earnings for the quarter increased to 90 cents per share from 74 cents in the year-earlier quarter, but missed the Zacks Consensus Estimate by 3 cents. Quarterly consolidated revenues increased 15.3% year over year to $45,739 million, primarily due to the accretive Time Warner acquisition. The top line beat the Zacks Consensus Estimate of $45,630 million. (Read more: AT&T Misses Q3 Earnings Estimates, Trumps on Revenues)
3. Juniper Networks, Inc. JNPR reported better-than-expected results in third-quarter 2018, wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate. Its financial performance was primarily driven by sales growth in Enterprise business, decrease in total cost of revenues and income tax benefit.
Non-GAAP net income for the reported quarter was $191 million or 54 cents per share compared with $211.1 million or 55 cents per share in the year-ago quarter. The year-over-year decline was due to the recognition of previously unrecognized tax benefits and reduction of expected tax liabilities from tax accounting method change. However, non-GAAP earnings per share comfortably beat the Zacks Consensus Estimate by 10 cents. Net revenues were $1,179.8 million compared with $1,257.8 million in the prior-year quarter, down 6.2% primarily due to decrease in sales in Service Provider and Cloud business. However, the top line exceeded the Zacks Consensus Estimate of $1,174 million. (Read more: Juniper Beats on Q3 Earnings Despite Soft Revenues)
4. Corning Inc. GLW delivered healthy third-quarter 2018 results driven by sales and profit growth in each of its businesses led by investment in innovation and capacity expansions.
Core earnings for the quarter came in at $476 million or 51 cents per share compared with $403 million or 40 cents per share in the year-earlier quarter. Adjusted earnings beat the Zacks Consensus Estimate by 3 cents. Quarterly core sales increased 15.6% year over year to $3,045 million, surpassing the Zacks Consensus Estimate of $2,996 million. (Read more: Corning Beats Q3 Earnings on Holistic Growth, View Up)
5. Motorola Solutions, Inc. MSI announced the launch of the TALKABOUT T800 two-way radios with mobile app to stay connected even while being off the cellular grid during hunting and skiing.
The new product will enable the revelers to share their location over radio frequencies and/or seek help in emergency situations. The radios are equipped with an emergency alert feature that transmits an alert siren and enable users to send the signal to other radios and warn of any impending danger. Emergency alerts could also be controlled by TAKLABOUT app.
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 was the biggest gainer, with its share price increasing 6%. Sprint Corporation S was the major decliner, with its stock losing 7.9%.
Over the past six months, QUALCOMM Incorporated QCOM has been the best performer, with its stock appreciating 19.4% while AT&T declined the most, with its shares falling 9%.
Over the past six months, the Zacks Telecommunications Services industry recorded an average decline of 4.6% while the S&P 500 lost 0.2%.
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 other telecom firms fare in the earnings season.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Sprint Corporation (S) : Free Stock Analysis Report
AT&T Inc. (T) : Free Stock Analysis Report
Corning Incorporated (GLW) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research