Sprint Earnings: The Survival Struggle Continues

So far, Sprint (S) stock has fallen 3.0% as of 1:10 PM ET today. Today’s Sprint earnings release came in lower than expected for the second quarter before the market bell. The second quarter ended on September 30. Sprint’s earnings per share loss of $0.07 was better than its corresponding $0.05 in Q2 of 2018. Wall Street analysts’ had expected the company to post an EPS loss of $0.02.

Sprint’s net revenues fell 7.6% year-over-year to $7.8 billion in the second quarter, which missed analysts’ forecast of $8.2 billion. The company reported revenues of $8.4 billion in the second quarter of 2018.

Sprint earnings: Key metrics

In the second quarter, Sprint gained 273,000 postpaid net customers, which includes net losses of 91,000 postpaid phone subscribers—lower than analysts’ expectation of 145,000 net losses. Today’s Sprint earnings also showed that the company lost 34,000 postpaid phone customers in the second quarter of 2018.

In Q2 2019, Sprint also lost a net 207,000 prepaid customers. It reported a postpaid phone churn rate of 1.91% in the second quarter, which was more than its rate of 1.73% in the second quarter of 2018.

T-Mobile merger

Sprint is struggling to complete its proposed $26.5 billion merger with T-Mobile (TMUS) due to a multistate lawsuit filed to stop the combination. The court challenge is led by California and New York. The lawsuit alleges that T-Mobile–Sprint merger could harm wireless subscribers. A court hearing is scheduled to begin next month. According to a CNBC report dated October 16, the FCC and the DOJ have approved the merger contract.

In Sprint’s earnings release for Q2 of 2019, CEO Michel Combes said, “I remain convinced that merging with T-Mobile and building one of the world’s most advanced 5G networks is the best outcome for all consumers, employees, and shareholders.” To learn more about the merger agreement, see T-Mobile Provides an Update on Its Merger with Sprint.

Sprint is offering 5G network services in nine cities. To learn more, check out Sprint Expands Its 5G Network Coverage in Nine Cities.

Peer comparison

T-Mobile’s Q3 revenue of $11.1 billion missed analysts’ forecast of $11.3 billion, and its adjusted EPS of $1.01 beat their estimate of $0.96. In the third quarter of 2018, the telecom company posted an adjusted EPS of $0.93 on total revenue of $10.8 billion.

AT&T’s (T) revenues fell 2.5% year-over-year to $44.6 billion in the third quarter. The company’s adjusted EPS grew about 4.4% year-over-year to $0.94. Wall Street analysts’ expected AT&T to post adjusted EPS of $0.93 on revenue of $45 billion.

Sprint’s stock performance

Sprint has delivered a return of 8.3% year-to-date as of November 1. T-Mobile and AT&T have risen 29.7% and 36.5%, respectively. On November 1, Sprint’s closing price was $6.30 per share. The stock is trading 15.8% above its 52-week low of $5.44 per share and 21.8% below its 52-week high of $8.06 per share.

Sprint stock has fallen 1.3% in the last five trading days but risen 2.3% in the trailing one-month period. The stock has just risen 0.3% in the trailing 12-month period.

Of the 18 analysts tracking Sprint in November, two have recommended a “sell” while one has recommended a “strong sell” for the stock. About 14 analysts have recommended a “hold,” and one analyst has recommended a “buy.”

On November 4, Sprint had a consensus 12-month target price of $6.43, which represents a 2.1% return on investment over the next 12 months, based on the last closing price.