What to Expect from Sprint’s Q3 Earnings

Sprint (NYSE:S) is scheduled to report its earnings for the third quarter of fiscal 2019 on January 27 before the market bell. Sprint will be the first among the major telecom companies to release its earnings for the quarter ending in December 2019. The company’s management won’t host an earnings conference call with analysts.

AT&T (NYSE:T) will report its earnings on January 29. Meanwhile, T-Mobile (NYSE:TMUS) will likely report its earnings next month.

Sprint’s third-quarter earnings expectations

Wall Street analysts expect Sprint to report an EPS of -$0.05 on revenues of $8.22 billion for the third quarter. In the third quarter of fiscal 2018, the company reported an EPS of -$0.03, which missed the consensus estimate of -$0.02. Sprint reported revenues of $8.60 billion, which beats the consensus estimate by about $187 million.

In the third quarter of fiscal 2019, Sprint will likely report net losses of 100,000 prepaid customers and 200,000 postpaid phone customers. The company will likely report a postpaid churn rate of 2.05% in the third quarter.

Peer comparison

In the fourth quarter, Wall Street analysts expect AT&T to report revenues of $46.9 billion, which implies a YoY (year-over-year) fall of 2.2%. Also, analysts expect the company to report an adjusted EPS of $0.87 in the fourth quarter, which implies a YoY rise of 1.2%.

In the fourth quarter, analysts expect T-Mobile to report revenues of $11.8 billion, which implies a YoY rise of 3.3%. Also, they expect the company to report an adjusted EPS of $0.83 in the fourth quarter, which implies a YoY rise of 10.7%.

Merger with T-Mobile

The proposed $26.5 billion merger deal between T-Mobile and Sprint is still pending. A group of state attorneys general wants to stop the combination due to antitrust issues. However, the antitrust regulators have approved the merger deal.

According to a FierceWireless report on Wednesday, “The attorneys general, all Democrats, sued to stop the deal on behalf of their states’ residents, whom they said could be harmed by higher prices due to reduced competition. The case ended last week, with Judge Marrero asking no questions of either side after closing arguments and saying he would decide the case as promptly as possible.”

According to LightShed Partners analyst Walter Piecyk, “It’s increasingly questionable whether Sprint has any equity value as a standalone company,” as reported by FierceWireless. He also said, “In addition, we believe it’s highly unlikely that Comcast or Charter are interested in Sprint given its cash burn and current debt load.”

Analysts’ recommendations for Sprint

Among the 17 analysts that cover Sprint stock as of today, two recommend a “buy,” 13 recommend a “hold,” and two recommend a “sell.” According to analysts’ consensus, Sprint stock has a mean target price of $6.27 and a current market price of $5.04. The target price suggests an upside potential of 24.4% in the next 12 months. The median target price is $6.00 today.

Stock performance

Sprint has delivered a return of -3.3% year-to-date as of Thursday. So far, T-Mobile and AT&T have returned 4.8% and -1.2%, respectively, this year. On Thursday, Sprint’s closing price was $5.04. The stock is trading 6.8% above its 52-week low of $4.72 and 37.5% below its 52-week high of $8.06.

Sprint stock has risen 3.7% in the last five trading days. However, the stock has fallen 3.6% in the trailing-one-month period and 18.3% in the trailing-12-month period. Currently, Sprint’s market cap is $20.7 billion.

Read T-Mobile and Sprint Merger in Limbo Due to Antitrust Issues and Merger Spotlight: Has Sprint Stock Bottomed Out? to learn more.