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Sprint: What to Watch in Its Q1 Earnings

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We expect Sprint (S) to release its first-quarter earnings on Friday. The first quarter ended on June 30. Before we dive into the company’s first-quarter estimates, we’ll recap its fourth-quarter performance compared to the estimates.

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Sprint’s earnings

In the fourth quarter of fiscal 2018, Sprint reported an adjusted EPS of -$0.04—compared to $0.02 in the fourth quarter of fiscal 2017. Analysts expected an adjusted EPS of -$0.01 in the fourth quarter of fiscal 2018. Sprint’s adjusted net income attributable to shareholders fell from $69 million in the fourth quarter of fiscal 2017 to -$174 million in the fourth quarter of fiscal 2018. The company’s adjusted EBITDA rose 13.3% YoY (year-over-year) to  $3.1 billion in the fourth quarter of fiscal 2018.

In the fourth quarter of fiscal 2018, Sprint gained 169,000 postpaid net customers. However, the number included net losses of 189,000 postpaid phone customers. The company also lost net 30,000 prepaid customers. To learn more about Sprint’s fourth-quarter performance, read How Sprint’s Q4 Earnings Growth Stacks Up with Peers.

In the first quarter, analysts expect Sprint’s adjusted EPS to reach -$0.04—compared to $0.04 in the first quarter of fiscal 2018. Analysts expect the company to report an adjusted EPS of -$0.17 in fiscal 2019 and -$0.13 in fiscal 2020.

T-Mobile’s (TMUS) adjusted EPS rose 18.5% YoY to $1.09 in the quarter ending June 30. AT&T’s (T) adjusted EPS fell 2.2% YoY to $0.89.

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Sprint’s revenues

Analysts expect Sprint’s total revenues to fall 0.8% YoY and reach $8.1 billion in the first quarter. Analysts also expect the company’s net sales to fall 1.5% YoY to $33.1 billion in fiscal 2019 and 0.6% to $32.9 billion in fiscal 2020.

In the fourth quarter of fiscal 2018, Sprint reported revenues of $8.4 billion, which beat analysts’ consensus estimate of $8.2 billion. The company’s fourth-quarter fiscal 2018 revenues rose 4.4% YoY from $8.1 billion in the fourth quarter of fiscal 2017. The YoY increase in the revenues was mainly due to higher equipment rentals and sales.

T-Mobile’s revenues rose 3.9% YoY to $11.0 billion in the quarter ending June 30. AT&T’s revenues rose 15.3% YoY to $45.0 billion.

Key metrics

In the first quarter, Sprint will likely report net losses of 50,000 prepaid customers and 200,000 postpaid phone customers. The company will likely report a postpaid phone churn rate of 1.75% in the first quarter.

AT&T reported 72,000 postpaid phone customer net additions in the quarter ending June 30, which beat analysts’ expectation of 27,000 net additions. T-Mobile reported 710,000 postpaid phone customer net additions, which beat analysts’ expectation of 643,000 net additions.

Shareholder returns and stock trends

Sprint has delivered a return of 26.0% year-to-date as of Wednesday. T-Mobile and AT&T have risen 25.3% and 19.3%, respectively. On Wednesday, Sprint’s closing price was $7.33 per share. The stock is trading 36.8% above its 52-week low of $5.36 per share and 9.1% below its 52-week high of $8.06 per share.

Sprint stock has fallen 4.3% in the last five trading days. However, the stock has risen 11.6% in the trailing one-month period and 33.5% in the trailing 12-month period. Read Sprint: Higher Target Prices Before Its Q1 Earnings to learn more.

Currently, Sprint’s market cap is $30.0 billion. The company is the fourth-largest US national wireless carrier in terms of market cap. T-Mobile’s market cap is $68.1 billion, while AT&T’s market cap is $248.5 billion.

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