As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the telecommunication services industry, including Globalstar (NASDAQ: GSAT) and its peers.
The sector is a tale of two cities. Satellite telecommunication is generally buoyed by rising global demand for connectivity in costly-to-connect and remote areas. On the other hand, 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. Despite the differences in demand drivers, companies across the entire industry must contend competition from larger telecom conglomerates and hyperscalers expanding their own networks as well as newer entrants such as SpaceX's StarLink.
The 6 telecommunication services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.6%.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Best Q2: Globalstar (NASDAQ: GSAT)
Known for powering the emergency SOS feature in newer Apple iPhones, Globalstar (NASDAQ: GSAT) operates a network of low-earth orbit satellites that provide voice and data communications services in remote areas where traditional cellular networks don't reach.
Globalstar reported revenues of $67.15 million, up 11.2% year on year. This print exceeded analysts’ expectations by 6.4%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS estimates and full-year revenue guidance exceeding analysts’ expectations.
Globalstar pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Unsurprisingly, the stock is up 11.9% since reporting and currently trades at $28.20.
We think Globalstar is a good business, but is it a buy today? Read our full report here, it’s free.
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 $3.09 billion, down 5.4% year on year, falling short of analysts’ expectations by 0.7%. However, the business still had a very strong quarter with a beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 18.2% since reporting. It currently trades at $5.29.
Is now the time to buy Lumen? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: 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 $1.19 billion, down 4.2% year on year, exceeding analysts’ expectations by 1.5%. Still, it was a softer quarter as it posted a significant miss of analysts’ EPS estimates.
Interestingly, the stock is up 3.4% since the results and currently trades at $40.08.
Read our full analysis of Telephone and Data Systems’s results here.
Iridium (NASDAQ: IRDM)
With a constellation of 66 low-earth orbit satellites providing coverage to every inch of the planet, Iridium Communications (NASDAQ: IRDM) operates a global satellite network that provides voice and data services to customers in remote areas where traditional telecommunications are unavailable.
Iridium reported revenues of $216.9 million, up 7.9% year on year. This print topped analysts’ expectations by 1.6%. Taking a step back, it was a softer quarter as it recorded a significant miss of analysts’ EPS estimates.
The stock is down 23.2% since reporting and currently trades at $24.93.
Read our full, actionable report on Iridium here, it’s free.
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 $246.2 million, down 5.5% year on year. This result lagged analysts' expectations by 0.7%. More broadly, it was actually a very strong quarter as it recorded a beat of analysts’ EPS estimates.
Cogent had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 13.9% since reporting and currently trades at $37.79.
Read our full, actionable report on Cogent here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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