The Technology sector, of which Telecom is an integral part, is likely to report modest earnings for the September-December quarter compared with other sectors. Despite supply-chain disruptions due to the worldwide shortage of semiconductors affecting telecom companies’ operations, the sector seems to have been well-placed with recurring revenues on digital acceleration. Better-than-expected sector revenues with a faster pace of 5G deployment and rapid proliferation of IoT devices amid the work-from-home trend instill optimism.
The passage of the $1.2 trillion infrastructure bill in the House further buoyed the growth momentum. The multi-billion infrastructure bill includes a $65 billion provision to significantly expand broadband access to Americans as the administration aims to fortify its technological prowess to thwart the dominance of countries like China. The plan envisions reaching the underserved areas of the country and prioritizing support for broadband networks affiliated with local governments, nonprofit organizations and cooperatives to encourage strong competition with privately-owned companies. The plan has also earmarked funds for the tribal areas that lack access to high-speed Internet to bridge the digital divide. It is likely to lower the prices for Internet services by requiring funding recipients to offer a low-cost affordable plan and encourage price transparency.
Though the sector appears to have overcome the pandemic-induced adversities through the gradual resumption of business activities, profitability has largely been compromised. Various trade restrictions on the grounds of national security concerns have eroded sector margins, while higher infrastructure investments for 5G networks have increased operating costs. Upfront capital investments for 5G have proven to be substantially higher than previous generations of wireless deployments due to network density requirements, hurting the return on capital.
While technological progress has changed the way consumers communicate, resulting in higher home data consumption and video streaming, intense competition and commoditization of services have limited the chances for companies to benefit from these trends.
Per the latest Earnings Trends, total earnings for the Technology sector for the quarter ended December 2021 are expected to be up 10.3% on 9.3% year-over-year higher revenues compared with the actuals of 36.1% and 17.2% in third-quarter 2021.
Let’s take a look at four leading Telecom stocks that are slated to report quarterly results on Feb 2.
Qualcomm Incorporated QCOM is set to report first-quarter fiscal 2022 results after the closing bell. This San Diego, CA-based company is expected to have recorded higher revenues year over year, driven by the ramp-up in 5G-enabled chips and strength in its Snapdragon portfolio.
During the quarter, Qualcomm launched its latest 5G mobile platform — Snapdragon 8 Gen 1. Featuring advanced 5G, AI, gaming, camera and Wi-Fi and Bluetooth technologies, the Snapdragon 8 is likely to transform the next generation of flagship mobile devices. It also unveiled the Snapdragon G3x Gen 1 Gaming Platform for gamers to enjoy their favorite games on the go. The platform combines all the Snapdragon Elite Gaming Technologies to create a new category of gaming devices and brings superior performance to run all Android games, play content from cloud gaming libraries and stream games from home console or PC. Such innovative products are likely to have translated into higher revenues in the quarter.
For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $10,450 million, indicating growth of 26.9% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at $3.01, which suggests an increase of 38.7%.
Our proven model does not predict an earnings beat for Qualcomm for the fiscal first 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.
Qualcomm currently has an Earnings ESP of 0.00% and a Zacks Rank #2.
QUALCOMM Incorporated Price and EPS Surprise
QUALCOMM Incorporated price-eps-surprise | QUALCOMM Incorporated Quote
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T-Mobile US, Inc. TMUS is scheduled to report fourth-quarter 2021 results after the closing bell. The Bellevue, WA-based wireless carrier is expected to have recorded year-over-year higher revenues on the back of subscriber growth. It continues to expand its 5G network to bring fast and affordable wireless service across the country while helping Americans access the latest products and technologies.
In the fourth quarter, T-Mobile witnessed 1.8 million postpaid net customer additions and 315 thousand postpaid account net additions. Postpaid phone net customer additions were 844 thousand, which increased year over year. High Speed Internet net customer additions were 224 thousand, reflecting the best quarter since launch. T-Mobile continues to deliver its game-changing Ultra Capacity 5G to more people at an unprecedented pace. It ended 2021 with more than 210 million people covered with the Ultra Capacity 5G, reaching more than 80% of its customers. These are likely to have aided the performance in the quarter.
The Zacks Consensus Estimate for T-Mobile’s revenues is pegged at $21,132 million, which indicates growth of 3.9% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at 16 cents, suggesting a decline of 84.5%.
T-Mobile currently has an Earnings ESP of +55.93% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks heree.
TMobile US, Inc. Price and EPS Surprise
TMobile US, Inc. price-eps-surprise | TMobile US, Inc. Quote
Qorvo, Inc. QRVO is scheduled to report third-quarter fiscal 2022 results after the closing bell. The Greensboro, NC-based company is expected to have recorded year-over-year higher revenues driven by product launches and strength across customer segments.
During the quarter, Qorvo entered into a channel agreement with TCT Brasil to support sales of Qorvo’s Infrastructure and Defense products in Brazil. TCT Brasil operates as an authorized distributor in the supply of semiconductors and electronic components. Qorvo launched three wideband power amplifiers that offer industry-leading performance over the full 1-40 GHz frequency range to support requirements for electronic warfare, radar and test equipment applications. These developments are likely to have positively impacted Qorvo’s performance in the quarter.
The Zacks Consensus Estimate for Qorvo’s revenues is pegged at $1,107 million, which indicates growth of 1.1% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at $2.75, suggesting a decline of 10.7%.
Qorvo currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
Qorvo, Inc. Price and EPS Surprise
Qorvo, Inc. price-eps-surprise | Qorvo, Inc. Quote
ADTRAN, Inc. ADTN is scheduled to report third-quarter fiscal 2022 results after the closing bell. The company is expected to have recorded year-over-year higher revenues driven by solid demand for its network solution.
ADTRAN’s end-to-end solutions simplify the deployment of fiber-based broadband services and provide a better customer experience. These products enable customers to transition to the fully converged, scalable, highly automated, cloud-controlled voice, data, Internet and video network of the future. The company has enabled service providers to leverage the ADTRAN Mosaic Software-Defined Access architecture that combines modern Web-scale technologies with open-source platforms to facilitate rapid innovation in multi-technology, multi-vendor environments. The Mosaic cloud platform and Mosaic OS, combined with programmable network elements, provide operators with a highly agile, open-services architecture.
The Zacks Consensus Estimate for ADTRAN’s revenues is pegged at $140 million, which indicates growth from $130 million reported in the year-ago quarter. The consensus estimate is pegged at a loss of 3 cents, suggesting a decline of 127.3%.
ADTRAN currently has an Earnings ESP of 0.00% and a Zacks Rank #3.
ADTRAN, Inc. Price and EPS Surprise
ADTRAN, Inc. price-eps-surprise | ADTRAN, Inc. Quote
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