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3 Telecom Stocks Likely to Surpass Q3 Earnings Estimates
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In the third quarter of 2022, telecom stocks witnessed a gradual revival as business operations returned to pre-pandemic levels. Despite supply chain woes related to continued chip shortage and challenging macroeconomic environment, the industry seemed to benefit from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices.
A steady pace of 5G deployment and investments by leading carriers to increase their fiber footprint in rural areas to bridge the digital divide seemed to infuse confidence in the sector. Telecom firms also stepped up efforts to provide a vital lifeline to countless humans as the work-from-home trend gained traction.
Factors at Play
Accelerated 5G Rollout: With the exponential growth of mobile broadband traffic and home Internet solutions, demand for advanced networking architecture has increased manifold. This has forced service providers to upgrade their networks and support the surge in home data traffic. To maintain superior performance standards, there is a continuous need for network tuning and optimization, which creates demand for state-of-the-art wireless products and services. Moreover, a faster pace of 5G deployment is expected to augment the scalability, security and universal mobility of the telecommunications industry and propel the wide proliferation of IoT.
Fiber Densification: Expansion of fiber optic networks by carriers to support their 4G LTE and 5G wireless standards, as well as wireline connections, are acting as tailwinds. The fiber-optic cable network is vital for backhaul and the last mile local loop, which are required by wireless service providers for 5G deployment. Fiber networks are also essential for the growing deployment of small cells that bring the network closer to the user and supplement macro networks to provide extensive coverage. The telecom industry is facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation through steady infrastructure investments.
Volatility in Raw Material Prices: The industry is continuously facing an acute shortage of chips, which are the building blocks for various equipment used by telecom carriers. Moreover, high raw material prices due to inflation, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. Although various steps have been taken to address the global shortage of semiconductor chips and devise ways to increase domestic production, the demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices.
Network Convergence: With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the industry is increasingly developing solutions to support wireline and wireless network convergence. The industry players have enabled enterprises to rapidly scale communications functionalities to a vast range of applications and devices with easy-to-use software application programming interfaces. The wide proliferation of cloud networking solutions is further resulting in increased storage and computing on a virtual plane. As both consumers and enterprises use the network, there is tremendous demand for quality networking equipment.
How to Pick?
A multitude of telecom stocks is likely to report earnings in the coming weeks. A solid earnings performance of the telecom sector could sow the seeds for future investments and R&D in network and 5G-enabled devices for superior 5G capabilities as the industry seeks to capitalize on the inherent growth potential.
Among a diverse range of companies, choosing the right stock for your portfolio could appear to be a colossal task. While it is impossible to be sure about such outperformers, our proprietary methodology makes the process fairly simple.
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), chances of a positive earnings surprise are as huge as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is an important ingredient of our proven model, which along with a top Zacks Rank, creates the perfect combination to determine stocks with the best chances to pull off a surprise in the upcoming earnings announcements. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Potential Winners
United States Cellular Corporation (USM - Free Report) : Headquartered in Chicago, IL, U.S. Cellular is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.
U.S. Cellular is expanding its footprint while adopting unlimited plans to enhance average revenue per user. The company has a mid-band spectrum in almost all of its operating markets. U.S. Cellular currently sports a Zacks Rank #1 and has an Earnings ESP of +47.46%. The company is scheduled to report results after the closing bell on Nov 3.
United States Cellular Corporation Price and EPS Surprise
TELUS Corporation (TU - Free Report) : Based in Burnaby, British Columbia, TELUS is one of the largest telecom carriers in Canada, covering 95% of the country’s population. It provides wireless, wireline, and Internet communications services for voice and data to businesses and consumers.
The addition of the 600 MHz spectrum will help TELUS increase its urban capacity while expanding the rural availability of wireless broadband service. It has also launched a 3500 MHz spectrum on its 5G wireless network to provide faster Internet connectivity to customers in various parts of Canada. The company is slated to report third-quarter results on Nov 4, before the opening bell. The stock currently has an Earnings ESP of +0.63% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech Telecommunications Corp. (CMTL - Free Report) : Headquartered in Melville, NY, Comtech is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data throughput. It holds leadership positions in the market for high-throughput modems used in cellular backhaul. This Zacks Rank #1 stock has an Earnings ESP of +38.46%. The company is scheduled to report results on Dec 8.
Comtech Telecommunications Corp. Price and EPS Surprise
Image: Bigstock
3 Telecom Stocks Likely to Surpass Q3 Earnings Estimates
In the third quarter of 2022, telecom stocks witnessed a gradual revival as business operations returned to pre-pandemic levels. Despite supply chain woes related to continued chip shortage and challenging macroeconomic environment, the industry seemed to benefit from higher demand for scalable infrastructure for seamless connectivity amid a wide proliferation of IoT devices.
A steady pace of 5G deployment and investments by leading carriers to increase their fiber footprint in rural areas to bridge the digital divide seemed to infuse confidence in the sector. Telecom firms also stepped up efforts to provide a vital lifeline to countless humans as the work-from-home trend gained traction.
Factors at Play
Accelerated 5G Rollout: With the exponential growth of mobile broadband traffic and home Internet solutions, demand for advanced networking architecture has increased manifold. This has forced service providers to upgrade their networks and support the surge in home data traffic. To maintain superior performance standards, there is a continuous need for network tuning and optimization, which creates demand for state-of-the-art wireless products and services. Moreover, a faster pace of 5G deployment is expected to augment the scalability, security and universal mobility of the telecommunications industry and propel the wide proliferation of IoT.
Fiber Densification: Expansion of fiber optic networks by carriers to support their 4G LTE and 5G wireless standards, as well as wireline connections, are acting as tailwinds. The fiber-optic cable network is vital for backhaul and the last mile local loop, which are required by wireless service providers for 5G deployment. Fiber networks are also essential for the growing deployment of small cells that bring the network closer to the user and supplement macro networks to provide extensive coverage. The telecom industry is facilitating its customers to move away from an economy-of-scale network operating model to demand-driven operations and seamlessly migrate to 5G by offering easy programmability and flexible automation through steady infrastructure investments.
Volatility in Raw Material Prices: The industry is continuously facing an acute shortage of chips, which are the building blocks for various equipment used by telecom carriers. Moreover, high raw material prices due to inflation, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. Although various steps have been taken to address the global shortage of semiconductor chips and devise ways to increase domestic production, the demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices.
Network Convergence: With operators moving toward converged or multi-use network structures, combining voice, video and data communications into a single network, the industry is increasingly developing solutions to support wireline and wireless network convergence. The industry players have enabled enterprises to rapidly scale communications functionalities to a vast range of applications and devices with easy-to-use software application programming interfaces. The wide proliferation of cloud networking solutions is further resulting in increased storage and computing on a virtual plane. As both consumers and enterprises use the network, there is tremendous demand for quality networking equipment.
How to Pick?
A multitude of telecom stocks is likely to report earnings in the coming weeks. A solid earnings performance of the telecom sector could sow the seeds for future investments and R&D in network and 5G-enabled devices for superior 5G capabilities as the industry seeks to capitalize on the inherent growth potential.
Among a diverse range of companies, choosing the right stock for your portfolio could appear to be a colossal task. While it is impossible to be sure about such outperformers, our proprietary methodology makes the process fairly simple.
Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), chances of a positive earnings surprise are as huge as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is an important ingredient of our proven model, which along with a top Zacks Rank, creates the perfect combination to determine stocks with the best chances to pull off a surprise in the upcoming earnings announcements. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Potential Winners
United States Cellular Corporation (USM - Free Report) : Headquartered in Chicago, IL, U.S. Cellular is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations.
U.S. Cellular is expanding its footprint while adopting unlimited plans to enhance average revenue per user. The company has a mid-band spectrum in almost all of its operating markets. U.S. Cellular currently sports a Zacks Rank #1 and has an Earnings ESP of +47.46%. The company is scheduled to report results after the closing bell on Nov 3.
United States Cellular Corporation Price and EPS Surprise
United States Cellular Corporation price-eps-surprise | United States Cellular Corporation Quote
TELUS Corporation (TU - Free Report) : Based in Burnaby, British Columbia, TELUS is one of the largest telecom carriers in Canada, covering 95% of the country’s population. It provides wireless, wireline, and Internet communications services for voice and data to businesses and consumers.
The addition of the 600 MHz spectrum will help TELUS increase its urban capacity while expanding the rural availability of wireless broadband service. It has also launched a 3500 MHz spectrum on its 5G wireless network to provide faster Internet connectivity to customers in various parts of Canada. The company is slated to report third-quarter results on Nov 4, before the opening bell. The stock currently has an Earnings ESP of +0.63% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
TELUS Corporation Price and EPS Surprise
TELUS Corporation price-eps-surprise | TELUS Corporation Quote
Comtech Telecommunications Corp. (CMTL - Free Report) : Headquartered in Melville, NY, Comtech is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data throughput. It holds leadership positions in the market for high-throughput modems used in cellular backhaul. This Zacks Rank #1 stock has an Earnings ESP of +38.46%. The company is scheduled to report results on Dec 8.
Comtech Telecommunications Corp. Price and EPS Surprise
Comtech Telecommunications Corp. price-eps-surprise | Comtech Telecommunications Corp. Quote
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