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Sometimes you need to separate your personal feelings from your thoughts about companies and their stocks.
People who loath Tesla Inc.
TSLA,
CEO Elon Musk — who famously made a bid on April 13 to buy Twitter Inc.
TWTR,
for $54.20 a share — have been having a ball posting nasty messages under #RIPTwitter.
But a review at the S&P 500
SPX,
communication services sector points to remarkable expectations for the company, even among analysts who don’t favor its stock.
Twitter’s shares closed at $48.93 on April 22 — 10% below Musk’s takeout offer price. That showed a lack of confidence that a deal might get done.
But weekend rumors changed the scene, with Twitter’s stock opening at $51.02, now only 6% below Musk’s takeout price.
Rapid growth for Twitter, even without Musk
As we wait for an announcement of any deal, we have screened the worst-performing sector in the S&P 500 this year: communication services. The sector was down 23% for 2022 through April 22, led by Netflix Inc.
NFLX,
with a year-to-date decline of 64%. (Twitter was up 13% for 2022 through April 22.)
Great sales expectations
Here are all 23 stocks in the S&P 500 communication services sector, ranked by expected compound annual growth rates (CAGR) for sales over the next two calendar years among analysts polled by FactSet:
| Company | Ticker | Two-year estimated sales CAGR | Estimated sales – 2022 ($mil) | Estimated sales – 2023 ($mil) | Estimated sales – 2024 ($mil) |
| Take-Two Interactive Software Inc. |
TTWO, |
28.6% | $3,975 | $5,118 | $6,571 |
| Twitter Inc. |
TWTR, |
19.1% | $5,945 | $7,222 | $8,431 |
| Match Group Inc. |
MTCH, |
16.8% | $3,519 | $4,139 | $4,798 |
| Meta Platforms Inc. Class A |
FB, |
15.5% | $131,084 | $152,913 | $175,011 |
| Alphabet Inc. Class A |
GOOGL, |
15.2% | $302,631 | $349,239 | $401,542 |
| Activision Blizzard Inc. |
ATVI, |
10.5% | $8,601 | $10,071 | $10,504 |
| Netflix Inc. |
NFLX, |
9.8% | $32,512 | $35,551 | $39,202 |
| Live Nation Entertainment Inc. | LYV | 9.8% | $14,012 | $15,619 | $16,887 |
| Walt Disney Co. |
DIS, |
9.2% | $87,406 | $96,433 | $104,216 |
| Electronic Arts Inc. |
EA, |
7.5% | $7,912 | $8,480 | $9,149 |
| Interpublic Group of Cos. Inc. |
IPG, |
5.8% | $9,499 | $9,869 | $10,631 |
| Paramount Global Class B |
PARA, |
5.3% | $30,588 | $32,066 | $33,918 |
| Fox Corp. Class A |
FOXA, |
3.9% | $14,439 | $14,886 | $15,588 |
| News Corp. Class A |
NWSA, |
3.9% | $10,340 | $10,608 | $11,153 |
| Charter Communications Inc. Class A |
CHTR, |
3.8% | $54,170 | $56,239 | $58,354 |
| Omnicom Group Inc |
OMC, |
3.3% | $14,352 | $14,826 | $15,322 |
| Warner Bros. Discovery Inc. Series A |
WBD, |
3.0% | $12,611 | $12,790 | $13,375 |
| T-Mobile US Inc. |
TMUS, |
2.9% | $80,971 | $83,177 | $85,749 |
| Comcast Corp. Class A |
CMCSA, |
2.9% | $122,556 | $124,791 | $129,765 |
| Verizon Communications Inc. |
VZ, |
2.0% | $136,935 | $139,228 | $142,373 |
| DISH Network Corp. Class A |
DISH, |
0.9% | $17,380 | $17,450 | $17,687 |
| AT&T Inc. |
T, |
-1.4% | $127,075 | $121,924 | $123,621 |
| Lumen Technologies Inc. |
LUMN, |
-4.0% | $17,287 | $15,735 | $15,945 |
| Source: FactSet | |||||
Click on the tickers for more about each company.
If you haven’t already done so, you should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
The estimates are for calendar years, because not every company’s fiscal year matches the calendar.
Twitter ranks second on the list for expected sales growth through 2023, even though only 11% of analysts polled by FactSet rate the shares a “buy” or the equivalent.
Rapid earnings growth expected
Here’s a similar comparison, this time sorting the components of the S&P 500 communication services sector by expected earnings-per-share CAGR through 2024:
| Company | Ticker | Two-year estimated EPS CAGR | Estimated EPS – 2022 | Estimated EPS – 2023 | Estimated EPS – 2024 |
| Live Nation Entertainment Inc. |
LYV, |
124.7% | $0.45 | $1.49 | $2.28 |
| T-Mobile US Inc. |
TMUS, |
85.0% | $2.74 | $6.12 | $9.37 |
| Take-Two Interactive Software Inc. |
TTWO, |
34.1% | $5.76 | $7.79 | $10.36 |
| Twitter Inc. |
TWTR, |
31.7% | $0.85 | $1.14 | $1.48 |
| Charter Communications Inc. Class A |
CHTR, |
25.4% | $30.55 | $37.55 | $48.02 |
| Match Group Inc. |
MTCH, |
21.8% | $2.57 | $3.22 | $3.81 |
| Walt Disney Co. |
DIS, |
19.1% | $4.76 | $5.91 | $6.75 |
| Warner Bros. Discovery Inc. Series A |
WBD, |
18.9% | $2.23 | $2.66 | $3.15 |
| News Corp. Class A |
NWSA, |
16.9% | $0.95 | $1.07 | $1.29 |
| Alphabet Inc. Class A |
GOOGL, |
16.6% | $116.48 | $137.13 | $158.49 |
| Meta Platforms Inc. Class A |
FB, |
16.5% | $12.13 | $14.35 | $16.47 |
| Netflix Inc. |
NFLX, |
15.9% | $10.93 | $12.14 | $14.68 |
| Comcast Corp. Class A |
CMCSA, |
14.4% | $3.54 | $3.95 | $4.64 |
| Activision Blizzard Inc. |
ATVI, |
13.6% | $3.58 | $4.35 | $4.62 |
| Electronic Arts Inc. |
EA, |
12.1% | $7.37 | $8.20 | $9.27 |
| Interpublic Group of Cos. Inc. |
IPG, |
7.6% | $2.67 | $2.86 | $3.10 |
| Fox Corp. Class A |
FOXA, |
7.2% | $3.29 | $3.51 | $3.77 |
| Omnicom Group Inc |
OMC, |
6.7% | $6.72 | $7.15 | $7.65 |
| Verizon Communications Inc. |
VZ, |
3.7% | $5.41 | $5.59 | $5.82 |
| AT&T Inc. |
T, |
-0.7% | $2.53 | $2.53 | $2.49 |
| Paramount Global Class B |
PARA, |
-1.3% | $2.76 | $2.32 | $2.68 |
| Lumen Technologies Inc. |
LUMN, |
-15.5% | $1.42 | $1.05 | $1.01 |
| DISH Network Corp. Class A |
DISH, |
-33.6% | $2.69 | $1.69 | $1.19 |
| Source: FactSet | |||||
Twitter ranks fourth, with analysts expecting a two-year EPS CAGR of 31.7%. The top-ranked company, Live Nation Entertainment Inc.
LYV,
is a pandemic recovery play as the concert business resumes.
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