The telecom industry is expected to grow as a result of increased demand for high-speed internet and quick 5G deployment. The increasing reliance on digital communication and the need for faster and more reliable connectivity are driving this growth. Also, the rise of new technologies, such as the Internet of Things (IoT) and artificial intelligence (AI), are boosting the demand for enhanced telecom infrastructure.
The global 5G infrastructure market is anticipated to reach $95.88 billion by 2030, at a CAGR of 28.4%, driven by the growing adoption of Internet of Things (IoT) technology.
The growing demand for high-speed, low-latency connectivity, combined with the increasing number of connected devices, is propelling the worldwide 5G infrastructure industry forward. Also, deploying 5G networks is projected to transform healthcare, automotive, and manufacturing industries, contributing to market expansion.
In addition, the global artificial intelligence in telecommunications market is expected to be valued at $1.18 billion in 2023 and $14.50 billion by 2033, growing at a significant CAGR of 28.5%.
With these favorable trends in mind, let’s delve into the fundamentals of the three Telecom – Domestic stocks, beginning with number 3.
Stock #3: Globalstar, Inc. (GSAT)
GSAT provides mobile satellite services (MSS), including voice and data communications services through its global satellite network. The company offers voice and data communication services over its network of in-orbit satellites and its active ground stations (gateways), which it refers to as the Globalstar System.
GSAT’s trailing-12-month EBITDA margin of 35.32% is 91% higher than the industry average of 18.49%. Its trailing-12-month CAPEX / Sales of 70.90% is significantly higher than the industry average of 4%.
During the fiscal second quarter that ended June 30, 2023, GSAT’s total revenue amounted to $55.07 million, up 49.7% year-over-year. Its adjusted EBITDA increased 86% year-over-year to $27.04 million.
Also, its net income came in at $9000, compared to a net loss of $26.76 million for the same period. Its income from operations came in at $2.62 million, compared to a loss from operations of $11.36 million.
Street expects GSAT’s revenue to increase 48% year-over-year to $219.75 million for the year ending December 2023. Its EPS is expected to increase at 92.9% for the same period. Shares of GSAT have gained 30.5% over the past six months to close the last trading session at $1.37.
GSAT’ POWR Ratings reflect this optimistic outlook. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GSAT has a B grade for Growth and Sentiment. Within the Telecom – Domestic industry, it is ranked #11 out of 18 stocks. Click here for the additional POWR Ratings for Value, Stability, Momentum, and Quality for GSAT.
Stock #2: T-Mobile US, Inc. (TMUS)
TMUS, together with its subsidiaries, provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. The company offers voice, messaging, and data services to customers in the postpaid, prepaid, and wholesale and other services.
TMUS’ forward non-GAAP PEG of 0.40x is 72.1% lower than the industry average of 1.42x.
TMUS’ trailing-12-month EBIT margin of 19.07% is 124.2% higher than the 8.50% industry average. Its trailing-12-month net income margin of 7.82% is 89.5% higher than the 4.13% industry average.
TMUS’ total service revenues for the second quarter ended June 30, 2023, increased 2.8% year-over-year to $15.74 billion. Its adjusted EBITDA came in at $7.41 billion, up 5.7% year-over-year.
Also, its net income came in at $2.22 billion, compared to a net loss of $108 million for the same period. Its EPS came in at $1.86, compared to a loss per share of $0.09.
The consensus revenue estimate of 81.68 billion for the year ending December 2024 represents a 3.8% increase year-over-year. Its EPS is expected to grow 32.3% year-over-year to $10.12 for the same period. It surpassed EPS estimates in all the four trailing quarters. TMUS’ shares have gained 6.9% over the past three months to close the last trading session at $141.93.
TMUS is ranked #6 in the same industry. It has a B grade for Growth, and Stability. To see additional TMUS’s ratings for Value, Momentum, Sentiment and Quality, click here.
Stock #1: Verizon Communications Inc. (VZ)
VZ offers communications, technology, information, and entertainment products and services worldwide to consumers, businesses, and governmental entities. It operates through two segments: Consumer and Business.
VZ’s forward EV/EBIT multiple of 10.67 is 31.2% lower than the industry average of 15.50. Its forward non-GAAP P/E multiple of 7.15 is 51.6% lower than the industry average of 14.78.
VZ’s trailing-12-month net income margin of 15.58% is 277.4% higher than the industry average of 4.13%. Its trailing-12-month ROCE of 23.22% is 463.3% higher than the industry average of 4.12%.
VZ’s service revenues and other, increased marginally year-over-year to $27.32 billion for the second quarter that ended June 30, 2023. Also, its total operating expenses came in at $25.38 billion, down 3.3% year-over-year.
VZ’s total current liabilities came in at $51.40 billion for the period that ended June 30, 2023, compared to $50.17 billion for the period that ended December 31, 2022. Its total assets came in at $379.96 billion, compared to $379.68 billion for the same period.
Analysts expect VZ’s revenue to increase marginally year-over-year to $135.86 billion for the year ending December 2024. Its EPS is expected to come in at $4.70 for the same period. The stock has gained marginally over the past month to close the last trading session at $33.79.
VZ has a B grade for Stability and Quality. It is ranked #5 in the same industry.
Beyond what is stated above, we’ve also rated VZ for Growth, Value, Momentum, and Sentiment. Get all VZ ratings here.
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TMUS shares were trading at $141.02 per share on Monday afternoon, down $0.91 (-0.64%). Year-to-date, TMUS has gained 0.73%, versus a 17.15% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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