Telecom Stocks Earnings Preview: T-Mobile, Ubiquiti And ViaSat

Stocks in the telecommunication space have revived after a dismal run in 2017 due to headwinds like intense competition in the wireless market and competitive threat from online streaming service providers.

The new tax law is a huge positive for the companies in this space. The corporate tax rate is now the lowest its been in 78 years. Large telecom operators book much of their revenues at home. Therefore, a significant reduction in corporate tax rate faced by telecom carriers will be immediately accretive to cash flow.

Buoyed by the new law, various sector participants like AT&T T and Comcast CMCSA have declared bonuses for their employees.

What Lies Ahead?

Key players like AT&T T and Qualcomm QCOM have reported impressive financial results, but investors interested in the telecommunication space are keenly awaiting reports from other participants like T-Mobile US TMUS, Ubiquiti Networks, Inc. UBNT and ViaSat Inc. VSAT.

Let's take a look at the aforementioned three telecom stocks slated to release their respective quarterly reports on Feb 8.

T-Mobile US

T-Mobile US is scheduled to release fourth-quarter 2017 results on Feb 08, before the market opens.

The Zacks Consensus Estimate for revenues is pegged at $10.89 billion, reflects year over year improvement of 6.98%. The Zacks Consensus Estimate for earnings is at 37 cents per share, showing a year-over-year decline of 17.78%.

The company is expected to deliver solid performance in the quarter on the back of solid subscriber statistics and share repurchase programs.Additionally, the company's rating was upgraded to Ba2 by Moody's, with its rating outlook being confirmed stable. Per the Zacks Consensus Estimates, T-Mobile US is likely to see an improvement in revenues.

Notably, the company's innovative network expansion methodologies and improvement plans, stellar network performance, deployment of LTE-U technology and offering of attractive unlimited data are key factors behind the mounting performance. This is supported by improving scale, healthy free cash flow generation, strong liquidity and valuable spectrum assets that also provide credit support.

Additionally, the wireless national carrier displays an impressive earnings surprise history. The company's bottom line beat the Zacks Consensus Estimate in all of the previous four quarters, with an average positive surprise of 53.97%.

Ubiquiti Networks

Ubiquiti Networks is scheduled to report second-quarter fiscal 2018 results on Feb 8, before the market opens.

Headquartered in San Jose, CA, the company is engaged in the business of designing, manufacturing and selling broadband wireless solutions worldwide. Its products and solutions include radios, antennas and management tools as well as other applications in the unlicensed radio frequency spectrum.

The company has an impressive history of earnings surprise. The company's bottom line beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 5.48%.

ViaSat

ViaSat is scheduled to report third-quarter fiscal 2018 results on Feb 8, after the market closes. ViaSat is a communications company based in Carlsbad, CA.  It operates as a global broadband services and technology company.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $388.56 billion, reflects year-over-year improvement of 2.08%. The Zacks Consensus Estimate for earnings is at a loss of 4 cents per share, reflecting a decline of 113.79% year over year.

ViaSat displays a positive earnings surprise history. Earnings beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 52.60%.

Our Take

Per our proprietary model, T-Mobile US, Ubiquiti Networks and ViaSat are unlikely to beat estimates in the to-be-reported quarter.

However, we expect higher activities in the telecom industry over the next week as big names like CenturyLink and Cincinnati Bell are set to release fourth-quarter 2017 numbers. The market will closely evaluate the results to assess industry dynamics and prospects.

Irrespective of an earnings beat or miss, investors should focus on the companies' fundamentals to take a decision. Therefore, don't forget to check our full write up on earnings releases of these stocks later.

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