Kalkine Media lists five communication stocks amid a volatile market

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Highlights:

  • Verizon Communications Inc. (NYSE: VZ) had a dividend yield of 6.21 per cent.
  • Netflix, Inc. (NASDAQ: NFLX) shot up around 42 per cent QTD through September 20.
  • The Walt Disney Company (NYSE: DIS) revenue jumped 26 per cent YoY in Q3 FY22.

The global market witnessed a massive sell-off in recent months on the growing concerns over an economic slowdown. Meanwhile, both, the central bank and market participants are struggling with an elevated inflation.

The mega-cap growth stocks were among the worst-hit segments in recent days, as investors seemed to have avoided the risk-bet assets amid economic turmoil. The communication stocks also witnessed a similar momentum in recent days.

Talking about the sector, Verizon Communications Inc. (NYSE: VZ), Netflix, Inc. (NASDAQ: NFLX), Activision Blizzard, Inc. (NASDAQ: ATVI), The Walt Disney Company (NYSE: DIS), and Meta Platforms, Inc. (NASDAQ: META) are among the renowned players in the segment.

Meanwhile, the recent inflation data stayed at a higher level last month, while investors were anticipating the data to show a cooling down in the reading. Market participants became concerned about the data, which also gave the Federal Reserve another reason to stick with their aggressive monetary plans.

With Fed's September meeting in focus, which began on September 20, followed by the Fed Chair Jerome Powell's conference the next day, investors seem to be walking cautiously, as they anticipate another three-quarter percentage point hike this month.

So let's discuss with Kalkine Media® about how the companies have performed in recent times and their financial highlights:

Verizon Communications Inc. (NYSE: VZ)

Verizon Communications is one of the major telecommunications firms with a market cap of US$ 170.61 billion. The company had a dividend yield of 6.21 per cent and it provides a range of communication, information, and entertainment products and solutions to consumers.

Verizon had a P/E ratio of 8.16. Talking about its recent stock performance, the VZ stock plummeted over 21 per cent YTD and 19 per cent QTD. On a YoY basis, the telecommunications firm's stock was down around 25 per cent through September 20.

The stock of the NYSE-listed company fell to its 52-week low of US$ 40.66 last Friday, September 16. Its Relative Strength Index (RSI) was 31 as of writing, according to Refinitiv data, which indicates a volatile state of the stock.

The company is expected to announce its Q3 FY22 earnings report on October 21.

Meanwhile, in Q2 FY22, Verizon's revenue was comparatively flat at US$ 33.8 billion. The net income of the New York-based telecommunications firm decreased by 10.7 per cent YoY to US$ 5.3 billion.

Netflix, Inc. (NASDAQ: NFLX)

Netflix is a leading streaming services and product firm with a market cap of US$ 111 billion. The company mainly provides subscription-based streaming services to its users. Its P/E ratio was 22.08.

Although the stock had noted a significant decline this year amid several economic tensions, it posted notable gains in the running quarter. The NFLX stock dropped by about 58 per cent YTD and 56 per cent YoY, while climbing about 42 per cent in the third quarter through September 20.

The stock of the streaming services provider saw its 52-week high of US$ 700.9894 on November 17 last year. At its current trading price, it was nearly 64 per cent down from that point.

The firm would announce its fiscal 2022 third-quarter earnings financial results on October 18, at 1 pm Pacific Time. 

Meanwhile, in Q2 FY22, Netflix's revenue improved to US$ 7.97 billion from US$ 7.34 billion in the year-ago quarter. The Los Gatos, California-based firm’s net income was US$$ 1.44 billion in the latest quarter, compared to US$ 1.35 billion in the prior year's same quarter.

Activision Blizzard, Inc. (NASDAQ: ATVI)

Activision Blizzard is a leading video game company that had a dividend yield of 0.62 per cent. The US$ 58.97 billion market cap company has gained attention from investors in recent days, given the growing popularity of the gaming industry.

The ATVI stock added more than 13 per cent YTD while trading flat on an annual basis. However, it retreated about three per cent QTD. The ATVI stock had an RSI of about 30 at the time of writing.

The GAAP revenue of Activision Blizzard was US$ 1.64 billion in Q2 FY22, down from US$ 2.29 billion in the year-ago quarter. Its digital channels revenue was US$ 1.47 billion in the latest quarter.

The Santa Monica, California-based company’s net earnings also plummeted to US$ 280 million in Q2 FY22, from US$ 876 million in Q2 FY21.

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The Walt Disney Company (NYSE: DIS)

Walt Disney is a mass media company with a market cap of over US$ 195.87 billion. The entertainment conglomerate firm provides a range of services like streaming services, theme parks, etc. Walt Disney's P/E ratio was 62.54.

The DIS stock slipped by around 30 per cent YTD, and about 39 per cent YoY. It traded around 14 per cent higher in the third quarter through September 20. Meanwhile, the stock of the mass media firm touched its 52-week low of US$ 90.23 on July 14, 2022.

In the third quarter of fiscal 2022, Walt Disney posted a net income of US$ 1.40 billion on revenue of US$ 21.50 billion. The revenue of the company jumped 26 per cent YoY, while its net income from continuing operations rose 53 per cent YoY.

Meta Platforms, Inc. (NASDAQ: META)

Meta Platforms, formerly known as Facebook.com Inc, is a social media company with a market cap of over US$ 392.05 billion. It is the parent firm of the social media and messaging platforms like Facebook, WhatsApp, Instagram, etc.

The stock of the social media firm was no exception and had crashed amid a slump in the overall market. The META stock lost 56 per cent YTD and 58 per cent YoY. On a QTD basis, it fell about eight per cent. It 52-week low of US$ 144.2935 was noted last Friday, September 16.

The revenue of Meta Platforms decreased by one per cent YoY to US$ 28.82 billion in Q2 FY22. The net income of the social media firm plunged 36 per cent YoY to US$ 6.68 billion in the Q2 FY22.

Bottom line

The struggle with soaring inflation and higher interest rates also prompted fears of a potential recession in the US. Several analysts expect that further tightening of the monetary support by the central bank could tip the economy into a recession.

It is no secret that the communication segment was one of the worst-hit segments amid the macroeconomic headwinds. However, given the growing demand for 5G and IoT services, some experts anticipate that the sector might continue to add new users. 

The demand for these services has increased significantly, especially in the post-pandemic period. In addition to that, the streaming services platforms are also growing in popularity because of their services.

But given the highly volatile trading ecosystem, it is hard to predict anything for now. Hence investors should tread cautiously. 

Notably, the S&P 500 Communication Services sector slumped more than 36 per cent in the last 12 months, while retreating nearly 34 per cent in 2022 so far. In the third quarter through September 20, it decreased by about five per cent.


 


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