Sprint (S) Q1 Loss Narrows, Revenues Top, Stock Up

Sprint Corp. S a leading telecom operator in the U.S. providing wireless and wireline services to individuals, business enterprises and government agencies.

Sprint has been losing customers of late and is trying all means to check churn and fend off competition. However, in this regard, the company has been continually making efforts to lure customers from rival carriers such as AT&T Verizon by offering attractive promotional plans and discounts. This in turn has led to high cash burn and heavy losses for the company. The company has a debt-laden balance sheet, negative operating cash flow and has been witnessing losses since 2007.

Nevertheless, we expect the company to benefit from its newly initiated growth and investment plans. The upcoming launch of its 5G network, promotional plan in collaboration with Amazon.com Inc., offering Amazon Prime as an add-on package to its customers, shift toward IP-enabled cloud services and sale-leaseback transactions to reduce liquidity woes are likely to boost its customer base.

Sprint currently carries a Zacks Rank #3 (Hold). The company has generated a positive average earnings surprise of 12.15% in the previous four quarters. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: Sprint incurs loss in Q1 of fiscal 2016. However, net loss was narrower than the Zacks Consensus Estimate. Our consensus estimate called for an adjusted net loss of 8 cents per share and the company reported adjusted net loss was 6 cents per share. Investors should note that these figures take out stock option expenses.

Revenue: Sprint reported total revenue of $8,012 million which surpassed our estimate by $36 million.

Key States to Note: In the reported quarter, Sprint added 180,000 retail postpaid connections. At first quarter end, the company had 30.945 million retail postpaid connections, up 3.1% year over year. Retail postpaid average revenue per user (ARPU) decreased 5.7% to $59.20 per month. In reported quarter, Sprint lost 331,000 net prepaid connections but gained 528,000 net wholesale connections.

Stock Price: At the time of writing, the stock price of Sprint was up nearly 5.41% (25 cents) in the per-market trade on NYSE. Clearly the initial reaction to the release is positive. We believe that better-than-expected revenues and net loss per share and net gain of postpaid subscribers are the primary reasons for the initial positive stock price movement.   

SPRINT CORP Price and EPS Surprise

SPRINT CORP Price and EPS Surprise | SPRINT CORP Quote

Check back later for our full write up on this Sprint earnings report later!  

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