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Should You Buy Telephone and Data Systems (TDS) Ahead of Earnings?

Zacks Equity Research
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Why TC PipeLines (TCP) Might Surprise This Earnings Season

TC PipeLines (TCP) is seeing favorable earnings estimate revision activity and has a positive Zacks Earnings ESP heading into earnings season.

Investors are always looking for stocks that are poised to beat at earnings season and Telephone and Data Systems, Inc. TDS may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.

That is because Telephone and Data Systems is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to earnings beat. After all, analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends underneath the surface for TDS in this report.

In fact, the Most Accurate Estimate for the current quarter is currently at 31 cents per share for TDS, compared to a broader Zacks Consensus Estimate of 25 cents per share. This suggests that analysts have very recently bumped up their estimates for TDS, giving the stock a Zacks Earnings ESP of +22.37% heading into earnings season.

Telephone and Data Systems, Inc. Price and EPS Surprise

Telephone and Data Systems, Inc. Price and EPS Surprise | Telephone and Data Systems, Inc. Quote

Why is this Important?

A positive reading for the Zacks Earnings ESP has proven to be very powerful in producing both positive surprises, and outperforming the market. Our recent 10-year backtest shows that stocks that have a positive Earnings ESP and a Zacks Rank #3 (Hold) or better show a positive surprise nearly 70% of the time, and have returned over 28% on average in annual returns (see more Top Earnings ESP stocks here).

Given that TDS has a Zacks Rank #1 (Strong Buy) and an ESP in positive territory, investors might want to consider this stock ahead of earnings. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clearly, recent earnings estimate revisions suggest that good things are ahead for Telephone and Data Systems, and that a beat might be in the cards for the upcoming report.

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