Leap Wireless International Earnings: Here’s Why Investors are Selling Shares Now

Leap Wireless International Inc. (NASDAQ:LEAP) had a loss and missed Wall Street’s expectations, BUT beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 3.85%.

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Leap Wireless International Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased to $-1.43 in the quarter versus EPS of $-1.28 in the year-earlier quarter.

Revenue: Decreased 4.33% to $789.86 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Leap Wireless International Inc. reported adjusted EPS loss of $1.43 per share. By that measure, the company missed the mean analyst estimate of $-1.26. It beat the average revenue estimate of $735.66 million.

Quoting Management: “The Company’s results reflect the early improvements we expected from our focus on enhancing the customer experience,” said S. Douglas Hutcheson, Leap’s chief executive officer. “The year-over-year percentage decline in gross customer additions, for both total customers and core wireless customers, improved from the fourth quarter. While the transition we are making to higher-quality smartphones and increased out-the-door device pricing is contributing to lower gross additions in the near term, these initiatives and other customer experience improvements we have introduced are leading to expected improvements in core wireless churn levels. We are continuing to introduce initiatives to drive front-door activity, including a new family plan and add-a-line promotion. We are also seeing improved sales of our iPhone® offering, having worked with Apple on new advertising, pricing plans and other promotions, and we look forward to continuing to collaborate with them. Looking ahead to the rest of 2013, we expect to continue to improve our device line-up with new handsets like the Samsung Galaxy S® 4 and to expand the device financing options we offer.”

Key Stats (on next page)…

Revenue increased 4.48% from $755.98 million in the previous quarter. EPS decreased to $-1.43 in the quarter versus EPS of $-0.72 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a loss of $0.84 to a loss $1.00. For the current year, the average estimate has moved down from a loss of $3.82 to a loss of $4.64 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)