As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q1. Today, we are looking at telecommunication services stocks, starting with Iridium (NASDAQ:IRDM).
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.
Iridium (NASDAQ:IRDM)
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 exceeded analysts’ expectations by 0.7%. Despite the top-line beat, it was still a slower quarter for the company with a miss of analysts’ EPS estimates.
"Demand for Iridium's mission-critical applications continued to drive revenue growth and support share buybacks," said Matt Desch, CEO, Iridium.
Interestingly, the stock is up 14.6% since reporting and currently trades at $26.61.
Read our full report on Iridium here, it’s free.
Best Q1: Lumen (NYSE:LUMN)
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 a solid beat of analysts’ EPS estimates.
Lumen achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 12.8% since reporting. It currently trades at $3.97.
Is now the time to buy Lumen? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: Telephone and Data Systems (NYSE:TDS)
Operating primarily through its majority-owned subsidiary UScellular and wholly-owned TDS Telecom, Telephone and Data Systems (NYSE:TDS) provides wireless, broadband, video, and voice communications services to 4.6 million wireless and 1.2 million broadband customers across the United States.
Telephone and Data Systems reported revenues of $1.15 billion, down 8.6% year on year, falling short of analysts’ expectations by 2.1%. It was a disappointing quarter as it posted a significant miss of analysts’ EPS estimates.
Telephone and Data Systems delivered the slowest revenue growth in the group. As expected, the stock is down 7.6% since the results and currently trades at $34.75.
Read our full analysis of Telephone and Data Systems’s results here.
U.S. Cellular (NYSE:USM)
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. This print came in 3.1% below analysts' expectations. It was a disappointing quarter as it also recorded a significant miss of analysts’ EPS estimates.
The stock is down 9.5% since reporting and currently trades at $62.16.
Read our full, actionable report on U.S. Cellular here, it’s free.
Cogent (NASDAQ:CCOI)
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 lagged analysts' expectations by 1%. All in all, it was a slower quarter for the company.
The stock is down 10% since reporting and currently trades at $47.84.
Read our full, actionable report on Cogent here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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