TELUS (TU) Q1 Earnings Season: What's in Store? - Analyst Blog
Leading Canadian telecom service provider TELUS Corporation TU is slated to release its first-quarter 2015 earnings results before the market opens on May 7.
Last quarter, TELUS had delivered a 12.50% negative earnings surprise. However, the company’s earnings have outpaced the Zacks Consensus Estimate in three of the past four quarters with an average beat of 0.10%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
In Mar 2015, TELUS purchased 15 MHz of AWS-3 spectrum for $1.5 billion. We believe the acquisition of this spectrum will enhance the company’s services and also drive revenues and subscriber gains.
The company also joined cloud-based business communications solutions provider – RingCentral – to launch TELUS Business Connect in the Canadian market. Notably, the company’s investments in cloud-based offerings and Internet of Things (IoT) market should continue to be the major growth drivers. Also, introduction of shared data plans and Customer First strategy should aid profitability and help the company see a lower churn rate in the upcoming quarter.
However, heightened wireless competition, the Canadian government’s new policy and increasing prepaid subscriber churn may hamper profitability at TELUS in the first quarter.
Earnings Whispers
Our proven model does not conclusively show that TELUS 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: TELUS’s earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 54 cents.
Zacks Rank: TELUS carries a Zacks Rank #2 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
Note that stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) should never be considered going into an 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:
Intuit Inc. INTU, with an earnings ESP of +2.34% and a Zacks Rank #2.
Cogent Communications Holdings, Inc. CCOI, with an earnings ESP of +33.33% and a Zacks Rank #3.
AOL Inc. AOL, with an earnings ESP of +8.70% and a Zacks Rank #3.
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