Due to the outbreak of the COVID-19 last year, the telecommunication industry suffered badly. However, telecom operators’ investments in infrastructure upgrades and value-added services have helped the industry achieve a solid recovery this year. In addition, with the emergence of wireless technologies like 5G, telecom companies have the opportunity now to capitalize on soaring demand for connectivity in the digital era.
Accelerating demand for high-speed data connectivity, rapid digitalization across industries and the explosion of consumer-generated multimedia content via Over-The-Top (OTT) applications should fuel the industry’s growth. Furthermore, the applications of wireless telegraphy, broadcasting, satellite communications, and fiber communications are expected to drive the telecom industry’s growth further. Indeed, the global mobile telecommunications market is expected to reach $835 billion by 2026, registering a 3.8% CAGR.
AT&T Inc. (T)
Incorporated in 1983, T offers telecommunications, media, and technology services. The Dallas, Tex.-based company operates through communications, WarnerMedia; and Latin America segments. Its segments offer wireless and wireline telecom, video and broadband services, advertising services, and wireless services in Mexico.
This month, T collaborated with Samsung and Qure4u to provide remote patient monitoring (RPM) for patients with high blood pressure. RPM has the potential to transform the patient experience and improve health outcomes at an affordable cost. The companies should help high-risk patients in underserved, rural communities, monitoring their health and empowering their doctors to make more informed decisions based on patient data.
T’s net income increased 98% year-over-year to $6.27 billion for the third quarter, ended September 30, 2021. The company’s total operating revenues under the Communications Segment grew 3.8% from the year-ago value to $28.22 billion. Its revenue under the Mobility sector rose 7% from the prior-year quarter to $19.1 billion. Also, under this segment, the company’s EBITDA increased 3.6% year-over-year to $7.99 million.
T has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 5.3% in the current year.
In terms of forward Price/Sales, T is currently trading at 0.94x, which is 44.3% lower than the 1.69x industry average. In addition, its 6.60x forward non-GAAP P/E is 61.9% lower than the 17.33x industry average.
T’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Value. We have also graded T for Growth, Stability, Momentum, Sentiment, and Quality. Click here to access all of T’s ratings. T is ranked #3 of 20 stocks in the Telecom – Domestic industry.
InterDigital, Inc. (IDCC)
IDCC is a Wilmington, Del.-based research and development company that licenses its innovations to the global wireless and consumer electronics industries. The company provides technology solutions for use in digital cellular and wireless products and networks and IEEE 802-related products and networks. IDCC operates seven research and development facilities in five countries.
During the third quarter, ended September 30, 2021, IDCC’s revenue increased 64% year-over-year to $143.5 million. The company’s income from operations grew 138.3% from its year-ago value to $36.78 million. Its net income rose 15.1% from the prior-year quarter to $25.21 million. Also, the company’s EPS increased 9.2% year-over-year to $0.83.
IDCC’s revenue is expected to increase 15.6% year-over-year to $415.14 million in its fiscal 2021. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Furthermore, its EPS is expected to increase by 925% in the current quarter.
In terms of forward EV/Sales, IDCC is currently trading at 3.87x, which is 5.3% lower than the 4.08x industry average Also, in terms of its forward non-GAAP PEG, the stock is currently trading at 1.08x, which is 32% lower than the 1.59x industry average. IDCC’s stock price has surged 8.7% over the past year and 10.3% year-to-date.
IDCC’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Growth and a B grade for Sentiment and Value.
Ooma, Inc. (OOMA)
OOMA provides software-as-a-service (SaaS) and unified-communications-as-a-service (UCaaS) platforms in the United States, Canada, and internationally. The Palo Alto, Calif., company’s solutions include Ooma Office and Ooma Enterprise and home phone services and products. In addition, OOMA offers Ooma Smart Security, a security and monitoring platform, and Talkatone mobile app.
Last month, OOMA added call analytics and other advanced features to its Ooma Office to make the business phone service more powerful and productive. Through this feature, the company will be able to meet the needs of all sized businesses and should provide SMBs access to sophisticated telecommunications functionality without sacrificing the affordability and ease of use that sets Ooma Office apart.
OOMA’s total revenue increased 14.4% year-over-year to $49.17 million for its fiscal third quarter, ended October 31, 2021. The company’s gross profit grew 13.3% from its year-ago value to $30.25 million. Its loss from operations decreased 27.4% from the prior-year quarter to $379,000. Also, the company’s net loss declined 21.1% year-over-year to $326,000.
For its fiscal year 2022, analysts expect OOMA’s revenue to increase 13.5% year-over-year to $191.77 million. It has surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, the company’s EPS is estimated to increase 6.3% next year.
In terms of forward EV/Sales, OOMA is currently trading at 2.46x, which is 1.2% lower than the 2.49x industry average. OOMA’s stock price has surged 40.4% year-to-date.
It is no surprise that OOMA has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Growth and a B grade for Value and Sentiment.
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T shares were trading at $22.13 per share on Wednesday morning, down $0.16 (-0.72%). Year-to-date, T has declined -17.32%, versus a 24.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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