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Telecom Stocks Earnings to Watch on Oct 30: MSI, S, VIAV

Supriyo Bose

The Technology sector, of which Telecom is an integral part, is likely to be a major drag on overall third-quarter earnings. The sector is expected to have taken a beating from the on-again-off-again trade war skirmishes that sent confusing signals to the market. Sector revenues, particularly within the chip industry, are expected to have declined significantly as the market bore the brunt of tariffs and counter tariffs, awaiting the elusive trade deal.

Moreover, various trade restrictions on grounds of national security concerns 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.

The Technology sector is the biggest earnings contributor in the S&P 500 Index, bringing in 22.9% of the index’s total earnings in forward four-quarter period. Per the latest Earnings Outlook, overall earnings for the Technology sector for the quarter are expected to be down 8.5% year over year. This compares unfavorably with the prior-quarter decline of 6.3%.

Let’s take a look at three Telecom stocks that are slated to report results for the September quarter on Oct 30.

Motorola Solutions, Inc. MSI is scheduled to report third-quarter 2019 results after the closing bell. The Zacks Consensus Estimate for revenues of $1,992 million indicates a fall of 7% from the year-ago reported figure. The consensus estimate for earnings per share is pegged at $1.95, indicating a 0.5% rise.

Our proven model does not predict an earnings beat for Motorola this time around. 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.

Motorola has a Zacks Rank #3 and Earnings ESP of 0.00%.

Motorola Solutions, Inc. Price and EPS Surprise

 

Motorola Solutions, Inc. Price and EPS Surprise

Motorola Solutions, Inc. price-eps-surprise | Motorola Solutions, Inc. Quote

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for Motorola’s revenues from Products & Systems Integration segment indicates an increase of 16.6% from the year-ago reported number as it focuses on both organic and inorganic growth. The company acquired WatchGuard, Inc. to add new capabilities to its video security solutions portfolio, while launching innovative products to keep networks secure against cybersecurity threats. However, the consensus estimate for revenues from the Services and Software segment is pegged at $641 million, indicating a decline of 9.8%, largely due to adverse foreign currency effects. (Read More: Can Top-Line Growth Drive Motorola's Q3 Earnings?)

Sprint Corporation S is set to report second-quarter fiscal 2019 financial results. The Zacks Consensus Estimate is currently pegged at a loss of 1 cent per share, indicating a decline of 120% from the year-ago reported figure. The consensus estimate for revenues stands at $8,165 million, down 3.2%.

Sprint has an Earnings ESP of -30.00% and Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here

Sprint Corporation Price and EPS Surprise

 

Sprint Corporation Price and EPS Surprise

Sprint Corporation price-eps-surprise | Sprint Corporation Quote

Attractive promotional plans and lucrative discounts to lure customers from rival carriers are likely to have translated into high cash burn rate, hurting margins in the quarter. In addition, Sprint has been witnessing lower-than-expected performance in its wireline business over the past few quarters, a trend that most likely continued in the third quarter owing to intense competitive pressure and high levels of wireless penetration in a saturated market.

Viavi Solutions Inc. VIAV is scheduled to report first-quarter fiscal 2020 results after the closing bell. The Zacks Consensus Estimate for earnings of 16 cents per share indicates 6.7% growth year over year. The consensus estimate for revenues is pegged at $288 million, up 7.1%.

Viavi has an Earnings ESP of +6.25% and Zacks Rank #2.

Viavi Solutions Inc. Price and EPS Surprise

 

Viavi Solutions Inc. Price and EPS Surprise

Viavi Solutions Inc. price-eps-surprise | Viavi Solutions Inc. Quote

During the quarter, Viavi secured a contract from Samsung to validate its 5G network equipment performance. The strategic partnership marks the first wrap-around testing of 5G stand-alone base station equipment, and is likely to have translated into incremental revenues for the quarter.

Check back later for our full write-up on earnings releases of these stocks.

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Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
 
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Sprint Corporation (S) : Free Stock Analysis Report
 
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