Please ensure Javascript is enabled for purposes of website accessibility

Why Sprint Corp. Stock Jumped 25% Today

By Daniel Sparks – Jul 25, 2016 at 1:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

While revenue was better than expected, there is probably a better reason for investor optimism for Sprint stock on Monday.

Image source: The Motley Fool.

What: Shares of telecom company Sprint (S) increased as much as 25% on Monday after it reported solid first-quarter results, including revenue exceeding analyst expectations and the company's highest first-quarter postpaid phone net additions in nine years. As of 12:50 p.m. EDT, shares are up 24.5%.

So what: For its first quarter, Sprint reported revenue of $8.01 billion and an earnings-per-share loss of $0.08 per share. The loss was in line with expectations, but revenue was ahead of analyst expectations for revenue of $7.99 billion. 

Sprint's slight outperformance on revenue compared to analysts' expectations. However, it probably isn't the main reason for the stock's big move on Monday. Instead, investor optimism for the stock is likely driven by Sprint's positive update on customer trends. In addition to reporting its highest first-quarter postpaid phone net additions in nine years, it reported its "lowest postpaid phone churn in company history," at 1.39%. Further, Sprint CEO Marcelo Claure said the company was "finally ... postpaid net port positive against all three national carriers after five years."

Now what: The company's positive key customer metrics, along with Sprint's achievement of increasing wireless net operating revenues by 1% year over year, offers investors positive signs amid its turnaround effort.

Going forward, Sprint management is guiding for between $1 billion and $1.5 billion in operating income in fiscal 2016 -- a huge improvement from its $310 million in operating income in the trailing twelve months.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sprint Stock Quote

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.