Will BCE Disappoint Earnings Estimates This Season? - Analyst Blog
Canada’s leading communications service provider, BCE Inc. (BCE) is slated to report its fourth-quarter 2014 quarterly numbers before the opening bell on Feb 5.
In the last reported quarter, the company had delivered a positive 4.29% earnings surprise. Moreover, the company lagged the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 1.10%. Let’s see how things are shaping up prior to this announcement.
Factors to be Considered this Quarter
BCE is poised to benefit from favorable developments on the wireless front, strong subscriber addition, the Astral acquisition and focus on technology upgrades. The company continues to focus on six strategic areas, which include investments in broadband network and services, accelerating of wireless services, leveraging on the wireline momentum, expanding media coverage, improving customer service and achieving a competitive cost structure. These initiatives are expected to generate higher revenue per user.
On the flip side, the price cap rules introduced by the Canadian regulators are limiting rate increases and reducing the amount that incumbent carriers can charge competitors for accessing its network. As BCE attempts to offset inter-carrier price caps by raising the fees of its own end-users have reduced overall demand as customers switch to lower-priced carriers.
Earnings Whispers?
Our proven model does not conclusively show that BCE is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 62 cents. This leads to an ESP of 0.00% for BCE.
Zacks Rank: BCE’s has a Zacks Rank #3 which increases the predictive power of ESP. However, when combined with ESP of 0.00%, it makes surprise prediction difficult.
Note that we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Note that we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.
Juniper Networks, Inc. (JNPR) with earnings ESP of +4.76% and a Zacks Rank #1 (Strong Buy).
Charter Communications, Inc. (CHTR) with earnings ESP of +121.74% and a Zacks Rank #2 (Buy).
CenturyLink, Inc. (CTL) with earnings ESP of +1.59% and a Zacks Rank #3.
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BCE INC (BCE): Free Stock Analysis Report
JUNIPER NETWRKS (JNPR): Free Stock Analysis Report
CENTURYLINK INC (CTL): Free Stock Analysis Report
CHARTER COMM-A (CHTR): Free Stock Analysis Report
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