Is Sprint a Safe Bet?

With shares of Sprint Nextel Corp. (NYSE:S) trading at around $5.75, is S an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

sprint-logoNo! That’s the answer to the question in the title. So much for suspense, huh? However, risky bets offer the biggest potential rewards. And Sprint definitely fits that bill. The question is whether rewards outweigh risks or vice versa.

The Softbank deal will help Sprint in regards to capital. This is important, considering the situation was beginning to look scary to investors. Softbank’s Chief Executive Masayoshi Son turned around Softbank’s mobile business in Japan, and he thinks he can guide Sprint toward the same type of turnaround. Son expects Sprint to remain weak for the next two years, but he feels as though record revenue is possible beyond that timeframe…

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Sprint’s earnings are expected to decline in 2013 due to depreciation costs related to the shutdown of Nextel’s 2G network and increased spending. Wireless revenues have been higher thanks to smartphone sales, and churn rates have improved slightly thanks to the enhancement of product and service offerings.

Sprint sold 6.6 million Apple Inc. (NASDAQ:AAPL) iPhones in 2012. Approximately 40 percent of those customers were new to Sprint. However, the iPhone is facing increased competition, and sales aren’t likely to remain as robust as in the past…