Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Sprint Strikes a 52-Week High: Are More Gains Ahead?

Shares of Sprint (NYSE: S  ) hit a 52-week high last week, finally reversing a long slide. Let's take a look at how it got here to find out whether there are clear skies ahead.

How it got here
Sprint's still unprofitable, but there seems to be light at the end of its tunnel at last. The company's Nextel dead weight is nearly shed, and revenue per user ticked up in its most recent quarter. There was enough good news in Sprint's quarterly earnings to lift network provider Clearwire (Nasdaq: CLWR  ) -- but the latter's own report wasn't bad, either. One key difference between Sprint and its network provider is that Sprint's been edging up all year, and last week's move finally brought it into positive territory for the past 52 weeks:

S Total Return Price Chart

S Total Return Price data by YCharts.

Smaller carrier MetroPCS (NYSE: PCS  ) also had good news last week, but like Clearwire, it has a long way to go to erase the past year's slide. Carriers AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) have ridden their safe status to straight-line gains, and remain the gold standard for domestic telecom investments. Will Sprint's latest move be the start of a longer period of growth, or is it destined to continue underperforming the big two? Let's look closer at the numbers to find out.

What you need to know
Sprint's got a way to go yet, as its price-to-free-cash-flow ratio is still much higher than AT&T or Verizon's. It's also considerably more expensive than MetroPCS, which has done quite well without the same high level of capital expenditures as the major wireless carriers:


P/E Ratio

Price-to-Free-Cash-Flow Ratio

Debt-to-Equity Ratio

Trailing-12-Month Capital Expenditures

Sprint NM 57.3 2.1 $3.51 billion
Clearwire NM NM 4.2 $156 million
MetroPCS 10.0 14.0 1.5 $786 million
AT&T 53.8 15.4 0.6 $20.27 billion
Verizon 48.1 8.4 1.3 $14.45 billion

Source: Morningstar. NM = not meaningful due to negative results.

One major positive for Sprint in this comparison is that, despite its higher level of debt, it's done a better job at retiring that debt than its telecom peers:

S Long Term Debt Chart

S Long Term Debt data by YCharts.

Sprint still maintains over $20 billion in long-term debt, but efforts toward paying it off seem to be winning over Wall Street. Since Sprint's bonds have lower credit ratings than AT&T and Verizon, it has somewhat more impetus to lower its debt levels. As it sheds Nextel assets and starts making the most of its iPhone subscribers, Sprint ought to be in better shape to retire more debt.

What's next?
Sprint may have better times ahead, but long-term shareholders are still far away from the levels seen five years ago. Sprint's still 80% below its 2007 highs. Can this turnaround sustain enough momentum to recapture those highs? Sprint hasn't been profitable in years, and its free cash flow's also been diminished in the past few quarters. Regaining profitability might not be on the near-term horizon, but a strong showing on the cash flow statement next quarter would be a big sign that this rally's sustainable.

The Motley Fool's CAPS community has given Sprint a two-star rating, but 81% of our CAPS players expect the company to beat the market in the future.

Interested in tracking this stock as it continues on its path? Add Sprint to your Watchlist now, for all the news we Fools can find, delivered to your inbox as it happens. Sprint might keep gaining, but you can't tie your hopes up in one stock. Diversify into other long-term opportunities, which you can read about here: "3 Stocks That Will Help You Retire Rich." Find out more about them in our free report -- click here to get the information you need today.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1963517, ~/Articles/ArticleHandler.aspx, 10/21/2016 5:54:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:01 PM
S $6.55 Down -0.17 -2.53%
Sprint CAPS Rating: **
CLWR.DL $0.00 Down +0.00 +0.00%
Clearwire Corp CAPS Rating: **
T $37.49 Down -1.16 -3.00%
AT and T CAPS Rating: ****
TMUS $46.75 Down -0.30 -0.64%
T-Mobile US CAPS Rating: ***
VZ $48.20 Down -0.94 -1.91%
Verizon Communicat… CAPS Rating: ****