Sprint (S) Gears Up for Q1 Earnings: What's in the Cards?

Shutterstock photo

Sprint Corporation S is scheduled to report first-quarter fiscal 2018 financial results before the opening bell on Aug 1. In the last reported quarter, the company delivered a positive earnings surprise of 133.3%. Notably, Sprint has trumped the Zacks Consensus Estimate for earnings in each of the trailing four quarters with an average of 208.3%.

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. Massive MIMO radios are software upgradable to 5G New Radio, allowing the company to fully utilize spectrum for both LTE and 5G simultaneously.

Whether this will lead to higher earnings in the quarter remains to be seen.

Factors to Consider

During the quarter, Sprint collaborated with NXM Labs Inc., an Internet of Things (IoT) Blockchain platform developer, to launch a 5G-ready connected car platform. The advanced and secure platform features the industry's first blockchain powered IoT security system. It involves a combination of high-speed, on-demand passenger Wi-Fi with advanced vehicle health monitoring and safety.

The communication service provider also announced that three major markets - New York City, Phoenix, and Kansas City - will experience the nation's first 5G wireless network in the first half of calendar 2019. It is expected to add more cities to the list soon.

The company has launched its new venture, Sprint IoT Factory, an innovative online B2B marketplace, to provide a wide range of solutions to businesses at reasonable rates. These solutions are designed by making optimal use of IoT and leveraging its prowess, enabling companies to better run their businesses. Moreover, it announced the launch of a new Point of Presence in Johannesburg, South Africa. The strategic move further extends the company's extensive global Wireline backbone network in one of its emerging markets.

All these collaborations and innovative product launches are likely to result in incremental revenues in the near future. 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.

Earnings Whispers

Our proven model does not conclusively show that Sprint is likely to beat earnings this quarter as it does not possess one of the two key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is exactly not the case here as you will see below:

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is currently pegged at -177.08%. 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

Zacks Rank: Sprint currently has a Zacks Rank #3, which increases the predictive power of ESP. However, the company's negative ESP acts as a dampener.

We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Illumina, Inc. ILMN has an Earnings ESP of +1.74% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Gladstone Commercial Corporation GOOD has an Earnings ESP of +0.83% and a Zacks Rank #2. 

Black Knight, Inc. BKI has an Earnings ESP of +2.30% and a Zacks Rank #2.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Sprint Corporation (S): Free Stock Analysis Report

Illumina, Inc. (ILMN): Free Stock Analysis Report

Gladstone Commercial Corporation (GOOD): Free Stock Analysis Report

Black Knight Financial Services, Inc. (BKI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: S , ILMN , GOOD , BKI

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?