We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Top-Line Contraction Affect AT&T's (T) Q1 Earnings?
Read MoreHide Full Article
AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2022 results, before the opening bell, on Apr 21. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 2 cents. In the first quarter, the company is likely to have recorded lower revenues year over year despite improving market conditions due to continued infrastructure investments for 5G rollout across the country, spin-off and divestment of businesses.
Factors at Play
In the first quarter, AT&T continued to expand its 5G network infrastructure and launched 5G+ service in select areas. The company’s 5G network currently covers more than 255 million users across the country and its 5G+ network is available in parts of 44 cities. AT&T deployed the C-Band spectrum in the first quarter to further expand its 5G+ coverage. The company aims to reach 70 million to 75 million people by the end of 2022 with its 5G+ service and targets to cover up to 200 million people in 2023. It is benefiting from lower levels of wireless churn due to seamless access to 5G technology on its unlimited wireless plans for consumers and businesses and the growing adoption of Unlimited Elite wireless plans. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T intensified its 5G focus by joining Ericsson 5G Startup Program to spearhead innovation and unlock the full potential of 5G services for consumers. The collaboration aims to offer value-added services to bring new immersive experiences to users, utilizing AR and VR technology across the spectrum. By joining this program, AT&T will gain access to a curated list of firms that develop scalable services, devices and applications over 5G. This, in turn, will likely facilitate it to differentiate its 5G offering and gain a competitive advantage by bundling relevant use cases and tariff features to drive higher 5G consumer adoption. This is likely to have translated into higher revenues for the Communications segment.
During the quarter, AT&T continued with its aggressive fiber build-out initiatives as it aims to connect 3.5-4 million additional locations with fiber each year to significantly increase its existing fiber footprint to more than 30 million locations by the end of 2025. The company expects that 75% of its network footprint will be either served by fiber or 5G, which will likely halve its legacy copper services exposure. These simplification initiatives are likely to have driven additional cost savings while creating new revenue opportunities.
However, adverse foreign currency translations and high operating costs for 5G deployments and fiber expansion are likely to have led to soft margins in the quarter. The infrastructure investments are likely to have weighed on the margins. Moreover, AT&T has divested its advertising and analytics division, Xandr, to Microsoft and was nearing the completion of the WarnerMedia spin-off to Discovery during the quarter. The transaction is expected to enable the carrier to trim its huge debt burden and focus on core businesses. The divestitures are likely to have contracted the revenue base on a year-over-year basis.
The Zacks Consensus Estimate for total revenues of the company stands at $38,304 million, indicating a decline from $43,939 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 78 cents per share. It had reported 86 cents in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T for the 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -3.33%, with the former pegged at 76 cents and the latter at 78 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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:
The Earnings ESP for Nokia Corporation (NOK - Free Report) is +28.57% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Apr 28.
The Earnings ESP for Apple Inc. (AAPL - Free Report) is +1.78% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 28.
Image: Bigstock
Will Top-Line Contraction Affect AT&T's (T) Q1 Earnings?
AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2022 results, before the opening bell, on Apr 21. In the last reported quarter, adjusted earnings beat the Zacks Consensus Estimate by 2 cents. In the first quarter, the company is likely to have recorded lower revenues year over year despite improving market conditions due to continued infrastructure investments for 5G rollout across the country, spin-off and divestment of businesses.
Factors at Play
In the first quarter, AT&T continued to expand its 5G network infrastructure and launched 5G+ service in select areas. The company’s 5G network currently covers more than 255 million users across the country and its 5G+ network is available in parts of 44 cities. AT&T deployed the C-Band spectrum in the first quarter to further expand its 5G+ coverage. The company aims to reach 70 million to 75 million people by the end of 2022 with its 5G+ service and targets to cover up to 200 million people in 2023. It is benefiting from lower levels of wireless churn due to seamless access to 5G technology on its unlimited wireless plans for consumers and businesses and the growing adoption of Unlimited Elite wireless plans. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T intensified its 5G focus by joining Ericsson 5G Startup Program to spearhead innovation and unlock the full potential of 5G services for consumers. The collaboration aims to offer value-added services to bring new immersive experiences to users, utilizing AR and VR technology across the spectrum. By joining this program, AT&T will gain access to a curated list of firms that develop scalable services, devices and applications over 5G. This, in turn, will likely facilitate it to differentiate its 5G offering and gain a competitive advantage by bundling relevant use cases and tariff features to drive higher 5G consumer adoption. This is likely to have translated into higher revenues for the Communications segment.
During the quarter, AT&T continued with its aggressive fiber build-out initiatives as it aims to connect 3.5-4 million additional locations with fiber each year to significantly increase its existing fiber footprint to more than 30 million locations by the end of 2025. The company expects that 75% of its network footprint will be either served by fiber or 5G, which will likely halve its legacy copper services exposure. These simplification initiatives are likely to have driven additional cost savings while creating new revenue opportunities.
However, adverse foreign currency translations and high operating costs for 5G deployments and fiber expansion are likely to have led to soft margins in the quarter. The infrastructure investments are likely to have weighed on the margins. Moreover, AT&T has divested its advertising and analytics division, Xandr, to Microsoft and was nearing the completion of the WarnerMedia spin-off to Discovery during the quarter. The transaction is expected to enable the carrier to trim its huge debt burden and focus on core businesses. The divestitures are likely to have contracted the revenue base on a year-over-year basis.
The Zacks Consensus Estimate for total revenues of the company stands at $38,304 million, indicating a decline from $43,939 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 78 cents per share. It had reported 86 cents in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T for the 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.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -3.33%, with the former pegged at 76 cents and the latter at 78 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:
Microsoft Corporation (MSFT - Free Report) is set to release quarterly numbers on Apr 26. It has an Earnings ESP of +0.03% and a Zacks Rank #3. You can see (T - Free Report) the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Nokia Corporation (NOK - Free Report) is +28.57% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Apr 28.
The Earnings ESP for Apple Inc. (AAPL - Free Report) is +1.78% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 28.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.