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Bear of the Day: China Telecom (CHA)

David Bartosiak
Bear of the Day: China Telecom (CHA)

With all the talk of trade wars between the US and China or the US and Europe, there are some stocks you should probably avoid. Today’s Bear of the Day isn’t a stock that should suffer from pain due to any potential trade war. The negativity surrounding this name is purely from analyst estimates coming in to the downside recently. I’m talking about China Telecom (CHA).

China Telecom Corporation Limited, together with its subsidiaries, provides wireline and mobile telecommunications services primarily in the People's Republic of China. It offers wireline voice services, including local wireline telephone services and long distance wireline services; CDMA mobile voice services, such as local calls, domestic and international long distance calls, intra-provincial roaming, and inter-provincial roaming and international roaming; wireline Internet access services comprising dial-up and broadband services; wireless Internet access services; and wireline, Internet, and mobile value-added services. 

The company is a Zacks Rank #5 (Strong Sell) in an industry that ranks in the Bottom 8% of our Zacks Industry Rank. The reason for the bearish Zacks Rank is that analyst estimates for the current year and next year have been on the decline. Sixty days ago, analysts expected to see $4.12 EPS for the current year and $4.76 for next year. Now, expectations have fallen to $4.01 for the current year and $4.53 for next year. Bulls in this name note that the current year estimate is still up from $3.80 last quarter. However, the recent drop in consensus is still a cause for some concern in the intermediate term.

Other international telecom stocks have more favorable Zacks Ranks. For example, TELE2 AB (TLTZY) is a Zacks Rank #2 (Buy) while Telecom Argetina (TEO) is a Zacks Rank #3 (Hold).

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