Nokia Corporation (NOK) is set to release its second-quarter 2014 results before the opening bell on Jul 24, 2014.
In the last quarter, the company delivered a positive 50.00% earnings surprise. Likewise, the company has delivered positive earnings surprises in three of the last four quarters, with an average beat of 77.78%. Let’s see how things are shaping up for this announcement.
Factors to be Considered This Quarter
Nokia’s future growth prospect looks promising mainly based on solid contract wins and aggressive 4GLTE network deployment across China as well as higher investments in network restructuring by emerging nations.
However, Nokia suffered severe setbacks dealt by several major credit rating agencies. Standard & Poor’s Rating Services (S&P) downgraded Nokia’s overall rating by two notches to junk territory. Moreover, the company’s decision to spend nearly $270 million in 2014 may affect its cash flow considerably.
Our proven model does not conclusively show that Nokia 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
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at -14.29%. This is because the Most Accurate Estimate is pegged at 6 cents while the Zacks Consensus Estimate is higher at 7 cents.
Zacks Rank: Though Nokia’s Zacks Rank #3 (Hold) increases the predictive power of ESP, we caution investors against the stock going into the earnings announcement, as a -14.29% ESP combined with a Zacks Rank # 3 lowers the possibility of an earnings surprise.
Note that the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Other 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.
Shenandoah Telecommunications Co. (SHEN) has an earnings ESP of +2.50% and a Zacks Rank #1 (Strong Buy).
BlackBerry Ltd. (BBRY) has an earnings ESP of +52.94% and a Zacks Rank #2 (Buy).
TELUS Corp. (TU) has an earnings ESP of +1.85% and a Zacks Rank #2.