The telecommunications industry is poised for expansion due to the growing need for improved connectivity and the rapid growth of 5G technology and infrastructure markets. Therefore, the telecom stock Globalstar, Inc. (GSAT) and Verizon Communications Inc. (VZ) could be added to a solid watchlist for potential entry opportunities in 2024.
Before we dig deeper into the fundamentals of these stocks, let’s discuss what’s shaping the industry outlook.
The telecommunications sector is driven by the increasing demand for high-speed, low-latency connectivity and the increase in connected devices. Additionally, the expansion of 5G technology and infrastructure across the globe is expected to transform sectors such as healthcare, automotive, and manufacturing, driving market growth.The global communications services market is expected to expand rapidly. CAGR 6.2% From 2023 to 2030.
Similarly, the proliferation of new technologies such as the Internet of Things (IoT) and artificial intelligence (AI) is increasing the need for advanced communications infrastructure. The global artificial intelligence in communications market is expected to reach $14.5 billion by 2033 and is growing rapidly. CAGR 28.5%.
Additionally, rapid digital transformation across industries, increasing data consumption, and rapid growth in internet and mobile device adoption are driving the communications cloud industry.The global communications cloud market size is expected to expand rapidly. CAGR 19.9% From 2022 to 2030.
With these favorable trends in mind, let’s take a look at the basics of the two.Communications – Domestic Start with the second selection of stocks worth adding to your watchlist.
Stock #2: Globalstar Co., Ltd. (GSAT)
GSAT provides mobile satellite services around the world. The company provides mobile voice and data satellite communications services and two-way voice and data products, including remote business continuity, recreational use, safety, emergency preparedness and response, and other applications.
On December 6, 2023, GSAT launched GSatSolar, a low-cost solar-powered satellite tracker designed for remote IoT operations and off-grid asset tracking. The device works with Global Satellite Engineering (GSE) to enhance VAR and customer tracking capabilities, providing reliable data collection in the field for increased efficiency and true remote IoT autonomous tracking.
said Jake Rembert, vice president of sales for GSAT. “GSatSolar is a low-cost option for remotely monitoring assets on the Globalstar LEO network, delivering large amounts of validated IoT data across IoT applications. GSatSolar is a versatile solution that extends satellite tracking capabilities. Like all of our IoT asset tracking solutions, it features low power consumption, long lifespan, and plenty of performance.”
In terms of capital expenditures/revenue over the past 12 months, GSAT’s 69.64% is significantly higher than the industry average of 4.09%. 41.55% in the last 12 months EBITDA margin 120% higher than the industry average of 18.88%. However, its trailing 12-month asset turnover ratio of 0.26x is 50.2% lower than the industry average of 0.52x.
GSAT’s total revenue for the fiscal third quarter ended September 30, 2023 increased 53.3% year-over-year to $57.68 million. Operating income was $2.02 million, while in the same period last year he had an operating loss of $186.64 million.
Net loss also decreased 97% year-over-year to $6.17 million. Additionally, the company’s adjusted EBITDA was $32.01 million, an increase of 124.8% year over year.
Street expects GSAT’s revenue for the quarter ending Dec. 31, 2023 to be $52.87 billion, up 28% from the same period last year. However, EPS for fiscal 2023 is expected to remain negative. Shares have increased 97.6% over the past nine months, closing the last trade at $1.95.
GSAT power rating reflects an uncertain outlook. The overall rating is C, which equates to Neutral according to our proprietary system. POWR Ratings evaluates stocks by 118 different factors, each with its own weighting.
Earns a C grade for growth, momentum, stability and quality. Ranked 10th out of 16 stocks. Communications – Domestic industry. To access GSAT’s ratings for Value and Sentiment, click here.
Stock #1: Verizon Communications Inc. (VZ)
VZ provides communications, technology, information and entertainment products and services to consumers, businesses and government agencies around the world. The company operates in two segments: Verizon Consumer Group and Verizon Business Group.
In terms of return on common stock over the past 12 months, VZ’s 22.56% is 562.5% higher than the industry average of 3.41%. Return on total equity for the trailing twelve months was 7.04%, which was 98.1% higher than the industry average of 3.55%. On the other hand, the company’s trailing 12-month asset turnover ratio is 0.35x, which is 31.5% lower than the industry average of 0.52x.
For the third quarter ended September 30, 2023, VZ’s total operating revenue was $33.34 billion. The company’s total operating expenses decreased 1.8% year over year to $25.86 billion. Net income and earnings per common share were $4.88 billion and $1.13, a decrease of 2.8% and 3.4%, respectively, compared to the same period last year.
However, total assets as of September 30, 2023 are $384.83 billion, compared to $379.68 billion as of December 31, 2022.
Analysts expect VZ’s revenue for the quarter ending March 31, 2024 to be $33.48 billion, up 1.7% year-over-year. However, EPS for the quarter ending December 31, 2023 is expected to be $1.08, down 8.9% year over year. It beat Street EPS estimates in each of the subsequent four quarters. Shares have increased 15.2% over the past three months, closing the last trade at $37.31.
VZ’s bleak outlook is reflected in its POWR rating. The overall rating is C, which equates to Neutral according to our proprietary system.
It has a C rating for Value, Momentum, and Sentiment. It ranks 14th in the industry. To see VZ’s growth, stability, and quality ratings, click here.
What’s next?
Steve Reitmeister, a 43-year investment veteran, shares his market outlook for 2024, his trading plans for the year ahead, and his top 11 stocks.
Stock market outlook for 2024 >
VZ stock rose $0.01 (+0.03%) in pre-market trading on Thursday. Year-to-date, VZ has increased by 1.56%. In comparison, the benchmark S&P 500 index rose 26.62% over the same period.
About the author: Abhishek Bhuyan
Abhishek began his professional journey as a financial journalist with a keen interest in identifying the fundamental factors that influence the future performance of financial products. more…
