Sprint (S) Incurs Q1 Loss As Expected, Beats On Revenues

Sprint Corporation (NYSE:S) reported healthy first-quarter fiscal 2019 financial results, wherein the top line increased year over year and surpassed the Zacks Consensus Estimate.

Net Loss

For the June quarter, net loss was $111 million or loss of 3 cents per share against net income of $176 million or 4 cents per share in the year-ago quarter. The sharp decline was primarily due to higher net operating expenses. The bottom line matched the Zacks Consensus Estimate of loss of 3 cents.

Sprint Corporation Price, Consensus and EPS Surprise

Revenues

Quarterly total net operating revenues increased to $8,142 million from $8,125 million in the year-ago quarter mainly driven by higher equipment rentals. The top line surpassed the Zacks Consensus Estimate of $8,024 million. Overall service revenues were $5,563 million, down from $5,740 million in the year-ago quarter, while equipment sales totaled $1,220 million, up from $1,173 million. Equipment rentals increased to $1,359 million from $1,212 million.

Segment Results

Total net wireless operating revenues were $7,901 million compared with $7,845 million in the year-ago quarter, primarily due to higher equipment sales and rentals. Total service revenues declined to $5,322 million from $5,460 million. Postpaid revenues totaled $4,199 million and prepaid revenues were $843 million. Wholesale, affiliate and other revenues summed $280 million. The segment’s operating income was $590 million compared with $1,002 million in the year-ago quarter. Adjusted EBITDA was $3,037 million compared with $3,318 million in the prior-year quarter for respective margins of 57.1% and 60.8%.

Net operating wireline revenues were $307 million compared with $338 million a year ago. Operating loss for the segment was $54 million compared with operating loss of $96 million in the year-ago quarter.

Other Details

Total net operating expenses increased to $7,687 million from $7,310 million. Consequently, operating income for the reported quarter was $455 million compared with $815 million a year ago. Overall adjusted EBITDA was $3,042 million compared with $3,280 million and adjusted EBITDA margin declined to 54.7% from 57.1%.

Cash Flow & Liquidity

During the first quarter of fiscal 2019, Sprint generated $2,244 million of net cash from operating activities compared with $2,430 million in the year-ago quarter. As of Jun 30, 2019, the wireless carrier had $4,869 million in cash and equivalents with $35,073 million of long-term debt and finance lease obligations.

Zacks Rank & Stocks to Consider

Sprint currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader industry are Harmonic Inc. (NASDAQ:HLIT) , Comtech Telecommunications Corp. (NASDAQ:CMTL) and Nokia (HE:NOKIA) Corp. (NYSE:NOK) . While Harmonic and Comtech sport a Zacks Rank #1 (Strong Buy), Nokia carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Harmonic surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 119.9%.

Comtech surpassed earnings estimates in each of the trailing four quarters, the average positive surprise being 216.7%.

Nokia surpassed earnings estimates thrice in the trailing four quarters, the average positive surprise being 89.3%.

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