Will CenturyLink (CTL) Earnings Disappoint Investors in Q4?
CenturyLink, Inc. CTL,a leading local exchange carrierin the U.S., is scheduled to release its fourth-quarter 2015 results on Feb 10, after market closes.
Last quarter, CenturyLink had delivered a positive earnings surprise of 1.45%. However, the company’s earnings have lagged the Zacks Consensus Estimate in two of the previous four quarters. The resultant trailing four-quarter average surprise is a positive 0.10%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
CenturyLink’s core local phone business has slowed significantly. This is primarily due to the substitution of traditional wireline telephone services by wireless carriers like Verizon Communication Inc. VZ. In addition, the company faces intense competition from cable TV operators like Frontier Communications Corp. FTR which aggressively offer traditional voice, Internet TV and cloud services over their networks.
Moreover, CenturyLink’s outlook for colocation revenues does not look very exciting. The company’s colocation revenues are shrinking and it is looking at ways to avoid investing more capital in the segment. As of now, CenturyLink is looking to monetize these assets in the near term.
Earnings Whispers
Our proven model does not conclusively show that CenturyLink 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: CenturyLink has an earnings ESP of -1.54%. This is because the Most Accurate estimate of 64 cents is pegged lower than the Zacks Consensus Estimate of 65 cents.
Zacks Rank: CenturyLink has a Zacks Rank #4 (Sell). Note that Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
Here is a company you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter:
Infinera Corporation INFN, which has an earnings ESP of +7.14% and a Zacks Rank #3
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CENTURYLINK INC (CTL): Free Stock Analysis Report
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