The earnings season is past the halfway mark with 265 S&P 500 members having reported results till Jul 27, 2018. Sustained momentum reinforces expectations that April-June 2018 is likely to replicate the performance of the prior quarter, which proved to be one of the strongest in the past seven years. Total earnings for the S&P 500 companies that have already reported are up 23.6% year over year on 10.1% higher revenues with 80.8% beating earnings estimates and 72.1% surpassing top-line expectations. Based on the hitherto observed pattern, the June-end quarter is anticipated to register healthy double-digit percentage earnings growth on a year-over-year basis.
Per the latest Earnings Preview, overall earnings for all the S&P 500 companies are expected to be up 23.6% on 8.8% growth in revenues. This represents an almost similar growth projection from the previous quarter, which recorded 24.6% earnings growth on 8.6% higher revenues, keeping in mind that actual results typically exceed estimates by 3-5%. Experts widely believe that earnings growth is likely to improve steadily until the end of 2019, as the effect of tax cuts gradually seep in.
The Technology sector, of which Telecom is part, appears to be quite strong. For the sector, earnings are expected to improve 30.6% year over year while revenues are touted to rise 11.8% due to healthy growth dynamics on the back of existing secular trends in cloud computing, artificial intelligence and Big Data.
Let’s take a sneak peek at two Telecom stocks scheduled to report earnings on Aug 1 to see how things are shaping up for the upcoming results.
Sprint Corporation S is scheduled to report first-quarter fiscal 2018 financial results before the opening bell. The company is diligently focusing on delivering 5G technology in major cities across the country to provide faster speed and superior service. It is deploying innovative 5G technology such as Massive MIMO for the launch of first 5G mobile networks in the first half of calendar 2019. However, for the fiscal first quarter, the Zacks Consensus Estimate for total revenues stands at $8,044 million, down from $8,157 million reported in the year-earlier quarter as the industry faces weak demands on challenging macroeconomic environment and ongoing trade-war related impediments with China. (Read more: Sprint Gears Up for Q1 Earnings: What's in the Cards?)
For the to-be-reported quarter, the company currently has an Earnings ESP of -177.08%, and Zacks Rank #3 (Hold), making an earnings surprise prediction uncertain. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Sprint Corporation Price and EPS Surprise
Sprint Corporation Price and EPS Surprise | Sprint Corporation Quote
T-Mobile US, Inc. TMUS is scheduled to report second-quarter 2018 results after the closing bell. During the quarter, T-Mobile and Sprint inked a merger deal. The transaction will help accelerate development of faster 5G wireless networks. The combined company would have about 127 million customers, a strong closing balance sheet and a fully funded business plan with a strong foundation of secured investment grade debt at close. Although the deal is yet to be completed, it is likely to attract more customers and improve the top line of the company.
T-Mobile's innovative network expansion methodologies continue to be faster and technologically sounder, in an attempt to stay ahead of its competitors. By 2018-end, the company is targeting a population coverage of 325 million and a geographic coverage of 2.5 million square miles. The company plans to use its 600 MHz spectrum holdings to deploy America’s first nationwide 5G network expected by 2020 and has successfully conducted Narrowband Internet of Things tests live on its commercial network.
We remain inconclusive about an earnings beat prediction this quarter as it has an ESP of -1.81% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
T-Mobile US, Inc. Price and EPS Surprise
T-Mobile US, Inc. Price and EPS Surprise | T-Mobile US, Inc. Quote
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