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Market Update

Earnings on Tap: Sprint

It's a long road ahead for the new Sprint to pull itself out of red.

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 Sprint (S) is set to report latest results ahead of the bell Tuesday, with analysts expecting the company to post a loss of $0.33 per share this quarter.

Sprint had posted a loss of $0.46 per diluted share in the corresponding period a year ago. For the first quarter, too, the mobile service provider recorded a loss, albeit narrower, of $643 million or $0.21 per share. The quarterly loss was smaller than Wall Street estimates, but revenue growth was partially offset by loss of customers following the shutdown of its Nextel network. Sprint has been posting losses during the past 20 consecutive quarters.

Earlier this month, the company announced the completion of its merger with Tokyo-based Softbank With this transaction, Softbank now holds a majority ownership in the third-largest U.S. wireless carrier.

According to Morningstar analyst Michael Hodel, Sprint's deal with Softbank has already enabled Sprint to strengthen its competitive position, striking a deal to acquire the remainder of Clearwire and buy assets from  U.S. Cellular (USM).

Hodel, however, thinks Sprint faces a long road as it pulls a number of disparate pieces together and revitalizes its business. The implicit backing of Softbank provides some comfort, but one needs to still exercise caution when considering an investment in the new Sprint, adds Hodel.

Sprint's shares are presently trading near Morningstar's fair value estimate.

Gazala Parveen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.