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Consolidated Communications (CNSL) Q2 Earnings: What's Up?

Zacks Equity Research

Consolidated Communications Holdings, Inc. CNSL is scheduled to report second-quarter 2019 results before the opening bell on Aug 1. In the last reported quarter, the company delivered a positive earnings surprise of 66.7%. Notably, Consolidated Communications surpassed the Zacks Consensus Estimate for earnings thrice in the last four quarters, the average beat being 20.9%.

For the second quarter, the company is likely to report lower revenues on a year-over-year basis.

Factors to Consider

Consolidated Communications remains focused on enhancing its broadband and commercial product suite to meet the needs of its business customers. During the quarter, the company launched 1 GigaBit broadband services within its rural New York service areas along with Derry and Nashua areas in New Hampshire, leveraging Fiber–To-The-Premises technology to significantly increase broadband speeds and on-demand capabilities for residents and businesses. Consolidated Communications also upgraded the broadband infrastructure of underserved communities in Northern New England to offer faster, reliable, broadband connectivity for symmetrical speeds and the ability to connect multiple devices without sacrificing speed.

Further, the company augmented its Cloud Secure solution for businesses by adding new, geographically diverse Cloud Secure environments and offering a new Security Lifecycle Review to provide businesses a customized report of security threats and vulnerabilities on their networks. The solution uniquely integrates next-gen firewall capabilities, advanced endpoint protection and threat intelligence to mitigate risk and provide customers greater control and visibility of their networks. These are expected to get reflected in the upcoming results.

However, the company is expected to record lower revenues year over year due to increased competition and lower demand curve. The Zacks Consensus Estimate for total revenues for the second quarter is pegged at $333 million. In the year-earlier quarter, it generated revenues of $350 million.

Earnings Whispers

Our proven model does not conclusively show that Consolidated Communications will beat earnings in the second quarter as it does not possess the key components. 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. This is not the case here as you will see below:

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% with both pegged at a loss of 7 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Consolidated Communications Holdings, Inc. Price and EPS Surprise

 

Consolidated Communications Holdings, Inc. Price and EPS Surprise

Consolidated Communications Holdings, Inc. price-eps-surprise | Consolidated Communications Holdings, Inc. Quote

Zacks Rank: Consolidated Communications sports a Zacks Rank #1. Although this increases the predictive power of ESP, we need a positive ESP to make us reasonably confident of an earnings beat.  

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
   
Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Ciena Corporation CIEN is set to release quarterly numbers on Aug 29. It has an Earnings ESP of +5.26% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Motorola Solutions, Inc. MSI is +1.25%, and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Aug 1.

The Earnings ESP for TELUS Corporation TU is +2.61% and it carries a Zacks Rank of 2. The company is slated to report quarterly numbers on Aug 2.

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