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Telecommunication Services Stocks Q1 Teardown: Globalstar (NASDAQ:GSAT) Vs The Rest
Telecommunication Services Stocks Q1 Teardown: Globalstar (NASDAQ:GSAT) Vs The Rest
As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the telecommunication services industry, including Globalstar (NASDAQ:GSAT) and its peers.
The sector is a tale of two cities. Satellite telecommunication is generally buoyed by rising global demand for connectivity in costly-to-connect and remote areas. On the other hand, terrestrial telecommunication companies face an uphill battle, as they mostly sell into a deflationary market, where the price of moving a bit tends to decrease over time with better technology. Despite the differences in demand drivers, companies across the entire industry must contend competition from larger telecom conglomerates and hyperscalers expanding their own networks as well as newer entrants such as SpaceX's StarLink.
The 6 telecommunication services stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 1.6%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Globalstar (NASDAQ:GSAT)
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ:GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Globalstar reported revenues of $60.03 million, up 6.3% year on year. This print fell short of analysts’ expectations by 5.9%. Overall, it was a softer quarter for the company with a significant miss of analysts’ EPS estimates.
Globalstar Total Revenue
Globalstar achieved the fastest revenue growth but had the weakest performance against analyst estimates of the whole group. Still, the market seems discontent with the results. The stock is down 17.9% since reporting and currently trades at $18.55.
With approximately 350,000 route miles of fiber optic cable spanning North America and the Asia Pacific, Lumen Technologies (NYSE:LUMN) operates a vast fiber optic network that provides communications, cloud connectivity, security, and IT solutions to businesses and consumers.
Lumen reported revenues of $3.18 billion, down 3.3% year on year, outperforming analysts’ expectations by 1.9%. The business had an exceptional quarter with an impressive beat of analysts’ EPS estimates.
Lumen Total Revenue
Lumen achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 17.9% since reporting. It currently trades at $4.15.
Operating as a majority-owned subsidiary of Telephone and Data Systems since its founding in 1983, US Cellular (NYSE:USM) is a regional wireless telecommunications provider serving 4.6 million customers across 21 states with mobile phone, internet, and IoT services.
U.S. Cellular reported revenues of $891 million, down 6.2% year on year, falling short of analysts’ expectations by 3.1%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.
As expected, the stock is down 11.1% since the results and currently trades at $61.03.
With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ:IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.
Iridium reported revenues of $214.9 million, up 5.4% year on year. This print beat analysts’ expectations by 0.7%. Zooming out, it was a slower quarter as it logged a miss of analysts’ EPS estimates.
The stock is up 9.8% since reporting and currently trades at $25.50.
Operating a massive network spanning 20,000 miles of fiber optic cable and connecting to over 3,200 buildings worldwide, Cogent Communications (NASDAQ:CCOI) provides high-speed Internet access, private network services, and data center colocation to businesses and bandwidth-intensive organizations across 54 countries.
Cogent reported revenues of $247 million, down 7.2% year on year. This result missed analysts’ expectations by 1%. Overall, it was a slower quarter for the company.
The stock is down 4.3% since reporting and currently trades at $50.87.
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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