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Telecom and Media Sectors: Weekly Updates for May 22–26

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Media sector outperformed last week but telecom stocks fell

The telecom sector (IYZ) fell 11.5% YTD through May 26, 2017, compared to the S&P 500’s (SPY) returns of 7.9%. Meanwhile, the media sector returned 7.4% YTD. The following graph compares the performance of the telecom and the media sectors with broader markets.

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The telecom sector has underperformed broader markets over the last 12 months

The telecom sector fell 5.8%, while media stocks rose 13.2% in the last 12 months. In comparison, the S&P 500 Index rose 14.1% on a trailing-one-year basis.

The telecom sector fell 3.7% on a trailing-one-month basis and 0.3% on a trailing-one-week basis. In comparison, the S&P 500 Index rose 1.1% and 1.4%, respectively. The media sector fell 2.3% on a trailing-one-month basis and rose 2% on a trailing-one-week basis. China Unicom (CHU) and Charter Communications (CHTR) were the top gainers in the telecom sector, while Sirius (SIRI) and Comcast (CMCSA) outperformed within the media sector.

The telecom sector had a poor Q1 earnings season and was the worst performer among the ten broad sectors. The sector saw negative growth in both revenues as well as the bottom line, according to FactSet. Three of the four top companies in the telecom sector reported a year-over-year decline in EPS (earnings per share), led by Verizon (VZ), which saw the biggest decline.

Meanwhile, Netflix (NFLX) stock reached all-time highs this week, which lifted the overall media sector performance. The company is likely to expand globally, which could cause its stock prices to rise over the next few years.

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