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Zacks Investment Ideas feature highlights: AT&T, Verizon and T-Mobile US
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For Immediate Release
Chicago, IL – April 24, 2020 – Today, Zacks Investment Ideas feature highlights Features: AT&T (T - Free Report) , Verizon (VZ - Free Report) and T-Mobile US (TMUS - Free Report) .
3 Telecom Giants Positioned to Drive the 5G Revolution
The market has drifted into uncharted waters with the global pandemic creating an unprecedented level of ambiguity. High yielding stocks with the balance sheet health and/or cash-flows to maintain their dividend may be a safe place to put some of your cash to work. Today, I am going to take a look at the telecom industry, where the 5G rollout has put these stocks on the edge of a technological revolution.
The S&P 500 has had a wild 2 months with a 35% market crash followed swiftly by a 25%+ recovery, catalyzed by the unprecedented level of monetary support the Federal Reserve has provided. This support has ‘artificially’ propping up the asset markets. Now the market is bracing itself for a wave of uncertain Q1 earnings reports and more pandemic driven headlines that will fuel the market.
AT&T
AT&T kicked of the telecom earning season with its Q1 release on April 22nd, and at first glance, it did not look great. Revenues were down 4.6% year-over-year (YoY), and adjusted EBITDA fell 3.9% YoY. The good news is that its future growth drivers have remained stable with its mobile segment growing its EBITDA by 7% YoY, and its advertising platform, Xandr, seeing a 20% YoY increase in EBITDA. The division that got hit the hardest was its entertainment segments due to a decline in TV subscribers and movie releases, which was to be expected.
AT&T is on the verge of launching its direct-to-consumer streaming platform HBO Max which will encompass the decades of content from its newly acquired WarnerMedia segment. This streaming platform is anticipated to be a significant growth driver for this media giant moving forward as the world cuts its cable and transitions to streaming. HBO Max anticipated launch date is May 27th.
AT&T is slowly transitioning to 5G with 5G Evolution rolled out around the nation, but this is only a marginal improvement from 4G LTE. AT&T’s true 5G service is only available in select cities around the US.
T is down 23% so far this year as its mixed portfolio, and uncertainty about HBO Max weighs on investor sentiment. The stocks 7% yield provides me with some comfort in its long-term portfolio potential. I do not see AT&T as the 5G winner, but I think that HBO Max has the potential to become a leader in the streaming space.
Verizon
Verizon’s shares have outperformed the broader market, staying quite buoyant amid these highly uncertain times. Verizon’s market leadership in telecommunication and 5G technology has made this company a necessity as the pandemic forces the US online. VZ’s category leadership, low beta (low market risk), and 4.2% dividend yield makes this stock an excellent long-term investment amid uncertain times.
Verizon is anticipated to release its Q1 earnings before the bell tomorrow morning. According to Zacks Consensus estimates, EPS is expected to come in at $1.22 on $32.35 billion in sales, which would represent YoY growth on both metrics.
Verizon said last month that it would be increasing its capital spending guidance for 2020 to accelerate its 5G rollout during this market disruptive time. Look for more color in the earnings call & report about its accelerated 5G timeline and anticipated performance moving forward.
T-Mobile US
The merger between T-Mobile and Sprint was finalized on April 1st, making the combined company a telecom powerhouse with a secure grip on the number 3 spot amongst telecom behemoths.
According to a T-Mobile press release regarding the merge, “the enhanced scale and financial strength of the combined company will drive a planned investment of $40 billion into its network, business and more over the next three years. Synergies achieved from the integration have the potential to unlock massive scale and unleash at least $43 billion in value for shareholders.”
The combined business will be holding its first earnings call on May 6th. I would listen carefully to this call as it will likely provide color on the synergies that these two firms have already discovered and their 5G progress. Analysts are increasingly optimistic about the combined telecom giant, with 12 out of 14 sell-side analysts calling TMUS a buy today.
TMUS does not offer a dividend, but its growth potential should more than satisfy investors return requirements. TMUS has already rallied 15% so far this year, far outperforming its cohorts and the broader market as investors price in the budding synergies between these two telecom giants.
I expect these shares to experience a lot volatility in the short-term, but if it can deliver on its $43+ billion in synergy proposition, I think TMUS has a lot more growth in front of it.
Take Away
The telecom space is sitting on the edge of the 5G revolution that will propel a wave of technological advancements. AT&T and VZ provide investors with sustainable cash-flows and a robust dividend, while the growth proposition of TMUS offers investors an opportunity to get in on the ground floor (or close to it) of a blossoming telecom giant.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: AT&T, Verizon and T-Mobile US
For Immediate Release
Chicago, IL – April 24, 2020 – Today, Zacks Investment Ideas feature highlights Features: AT&T (T - Free Report) , Verizon (VZ - Free Report) and T-Mobile US (TMUS - Free Report) .
3 Telecom Giants Positioned to Drive the 5G Revolution
The market has drifted into uncharted waters with the global pandemic creating an unprecedented level of ambiguity. High yielding stocks with the balance sheet health and/or cash-flows to maintain their dividend may be a safe place to put some of your cash to work. Today, I am going to take a look at the telecom industry, where the 5G rollout has put these stocks on the edge of a technological revolution.
The S&P 500 has had a wild 2 months with a 35% market crash followed swiftly by a 25%+ recovery, catalyzed by the unprecedented level of monetary support the Federal Reserve has provided. This support has ‘artificially’ propping up the asset markets. Now the market is bracing itself for a wave of uncertain Q1 earnings reports and more pandemic driven headlines that will fuel the market.
AT&T
AT&T kicked of the telecom earning season with its Q1 release on April 22nd, and at first glance, it did not look great. Revenues were down 4.6% year-over-year (YoY), and adjusted EBITDA fell 3.9% YoY. The good news is that its future growth drivers have remained stable with its mobile segment growing its EBITDA by 7% YoY, and its advertising platform, Xandr, seeing a 20% YoY increase in EBITDA. The division that got hit the hardest was its entertainment segments due to a decline in TV subscribers and movie releases, which was to be expected.
AT&T is on the verge of launching its direct-to-consumer streaming platform HBO Max which will encompass the decades of content from its newly acquired WarnerMedia segment. This streaming platform is anticipated to be a significant growth driver for this media giant moving forward as the world cuts its cable and transitions to streaming. HBO Max anticipated launch date is May 27th.
AT&T is slowly transitioning to 5G with 5G Evolution rolled out around the nation, but this is only a marginal improvement from 4G LTE. AT&T’s true 5G service is only available in select cities around the US.
T is down 23% so far this year as its mixed portfolio, and uncertainty about HBO Max weighs on investor sentiment. The stocks 7% yield provides me with some comfort in its long-term portfolio potential. I do not see AT&T as the 5G winner, but I think that HBO Max has the potential to become a leader in the streaming space.
Verizon
Verizon’s shares have outperformed the broader market, staying quite buoyant amid these highly uncertain times. Verizon’s market leadership in telecommunication and 5G technology has made this company a necessity as the pandemic forces the US online. VZ’s category leadership, low beta (low market risk), and 4.2% dividend yield makes this stock an excellent long-term investment amid uncertain times.
Verizon is anticipated to release its Q1 earnings before the bell tomorrow morning. According to Zacks Consensus estimates, EPS is expected to come in at $1.22 on $32.35 billion in sales, which would represent YoY growth on both metrics.
Verizon said last month that it would be increasing its capital spending guidance for 2020 to accelerate its 5G rollout during this market disruptive time. Look for more color in the earnings call & report about its accelerated 5G timeline and anticipated performance moving forward.
T-Mobile US
The merger between T-Mobile and Sprint was finalized on April 1st, making the combined company a telecom powerhouse with a secure grip on the number 3 spot amongst telecom behemoths.
According to a T-Mobile press release regarding the merge, “the enhanced scale and financial strength of the combined company will drive a planned investment of $40 billion into its network, business and more over the next three years. Synergies achieved from the integration have the potential to unlock massive scale and unleash at least $43 billion in value for shareholders.”
The combined business will be holding its first earnings call on May 6th. I would listen carefully to this call as it will likely provide color on the synergies that these two firms have already discovered and their 5G progress. Analysts are increasingly optimistic about the combined telecom giant, with 12 out of 14 sell-side analysts calling TMUS a buy today.
TMUS does not offer a dividend, but its growth potential should more than satisfy investors return requirements. TMUS has already rallied 15% so far this year, far outperforming its cohorts and the broader market as investors price in the budding synergies between these two telecom giants.
I expect these shares to experience a lot volatility in the short-term, but if it can deliver on its $43+ billion in synergy proposition, I think TMUS has a lot more growth in front of it.
Take Away
The telecom space is sitting on the edge of the 5G revolution that will propel a wave of technological advancements. AT&T and VZ provide investors with sustainable cash-flows and a robust dividend, while the growth proposition of TMUS offers investors an opportunity to get in on the ground floor (or close to it) of a blossoming telecom giant.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.