As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the terrestrial telecommunication services industry, including U.S. Cellular (NYSE: USM) and its peers.
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. Without dependable volume growth, revenue growth could be challenged. Unfortunately, broadband penetration in their core US market is quite high already. On the other hand, data consumption from streaming entertainment and 5G expansion could provide a floor on growth for the next number of years. As if that wasn't enough to worry about, competition is intense, with larger telecom providers and hyperscalers expanding their own networks.
The 4 terrestrial telecommunication services stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 1.1%.
While some terrestrial telecommunication services stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.1% since the latest earnings results.
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 fell short of analysts’ expectations by 3.1%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ EPS estimates.
"In the first quarter, we continued to work towards executing on our 2025 priorities which include successfully closing on the previously announced sale of the wireless business, while remaining focused on investing in a strong customer experience and operating our business efficiently," said Laurent Therivel, UScellular President and CEO.
U.S. Cellular delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 8.5% since reporting and currently trades at $62.81.
Read our full report on U.S. Cellular 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 pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $3.98.
Is now the time to buy Lumen? Access our full analysis of the earnings results here, it’s free.
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 6.8% since the results and currently trades at $35.04.
Read our full analysis of Telephone and Data Systems’s results here.
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 missed analysts’ expectations by 1%. All in all, it was a slower quarter for the company.
The stock is down 10.1% since reporting and currently trades at $47.75.
Read our full, actionable report on Cogent here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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