Why Verizon and AT&T Stocks Fizzled on Friday

Source The Motley Fool

Concerns about a top rival's performance put big telecoms Verizon (NYSE: VZ) and AT&T (NYSE: T) in the investor doghouse on Friday. The stocks of both companies traded limply, to the point where the pair closed the day more than 2% lower in price. That made them outliers, as the S&P 500 index inched 0.6% higher. Rather uncomfortably, both stocks are components of the index.

A peer disappoints

The aforementioned peer is T-Mobile US (NASDAQ: TMUS), which published its first-quarter results after market close on Thursday.

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The company beat the consensus analyst estimates for both revenue and profitability, and raised guidance, but that didn't compensate for several concerning developments. The first was that neither metric grew on a year-over-year basis; the top line experienced a nearly 5% decline, to under $20.9 billion, while headline net income slid marginally to $2.95 billion.

In terms of operational metrics, postpaid net customer additions of 495,000 topped AT&T's latest figure and contrasted very favorably with Verizon's decline. Yet, that number was notably short of the consensus estimate of 506,400.

Running with the pack

All three telecom incumbents basically swim in the same waters -- the products and services they offer don't differ all that much, after all. So, developments with one affect the others. That's particularly the case with T-Mobile, which was the last to report its most recent quarter this earnings season.

With its somewhat disappointing performance, the market will be expecting some positive, share price-boosting news from T-Mobile before the next earnings release. We can probably say the same, by extension, for Verizon and AT&T as well.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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