Will Verizon (VZ) Surprise Earnings Estimates in Q3?
Leading U.S. telecom operator, Verizon Communications Inc. (VZ), is set to release its third-quarter 2014 results before the opening bell on Sep 21, 2014.
In the last quarter, the company had delivered a positive earnings surprise of 1.11%. Interestingly, Verizon has surprised earnings in three of the last four quarters, with an average beat of 0.47%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Verizon has a strong foothold in the wireless and wireline sectors, with ample growth opportunities lined up in the forthcoming months. The company remains focused on improving profitability over the long term through the rapid evolution of 4G LTE, high smartphone sales, expansion of the FiOS network and strength in enterprise strategic services in areas such as global IP, cloud computing, security and managed services.
On the downside, persistent erosion in access lines, uncertain returns from investments, iPhone subsidies, hindrances in spectrum deals and intense competition may act as headwinds for Verizon, going forward.
Earnings Whispers?
Our proven model does not conclusively show that Verizon is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below:
Negative Zacks ESP: Verizon has an Earnings ESP of -2.17%. This is because the Most Accurate Estimate is 90 cents while the Zacks Consensus Estimate is pegged higher at 92 cents.
Zacks Rank: Verizon’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.
On the other hand, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter –
Dragonwave Inc (DRWI) has an earnings ESP of +16.67% and a Zacks Rank #3 (Hold).
BCE Inc. (BCE) has an earnings ESP of +2.70% and a Zacks Rank #3.
Ruckus Wireless (RKUS) has an earnings ESP of +60.00% and a Zacks Rank #3.
Read the Full Research Report on BCE
Read the Full Research Report on VZ
Read the Full Research Report on DRWI
Read the Full Research Report on RKUS
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