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RCI: Will It Beat Earnings?

Zacks Equity Research

Rogers Communications Inc. (RCI), one of the leading telecom carriers of Canada,is set to release its first-quarter 2013 results after the market opens on Apr 24, 2013.

In the last quarter, the company delivered a 20.55% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered This Quarter

Increased competition within its Cable segment is expected to remain the biggest concern for Rogers. Rival BCE Inc.’s entry into cable TV services is expected to slash Rogers’ market share and cap margin expansion. Rogers’ Media segment could get affected by the continued softness in the advertising market and a double-digit revenue dip is expected in its publishing division.      

However, during the quarter, Rogers has reached a multi-year deal with AMC Networks Inc. that will line-up the latter’s popular channels with Rogers’ digital cable and will also limit customer churn.

Earnings Whispers

Our proven model does not conclusively show that Rogers Communications is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 78 cents while the Zacks Consensus Estimate is higher at 79 cents. This leads to an ESP of -1.27% for Rogers.

Zacks Rank #2 (Buy): However, Rogers’ Zacks Rank #2 increases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks earnings ESP of -1.27% combined with Zacks Rank# 2 lowers the possibility of an earnings surprise.

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: 

  • Research In Motion Ltd. (BBRY) currently has an Earnings ESP of +500.00% and holds a Zacks Rank #2 (Buy)
  • AT&T Inc. (T) has an Earnings ESP of +1.56% and carries a Zacks Rank #2 (Buy)
  • CBS Corporation (CBS) currently has an Earnings ESP of +1.47% and holds a Zacks Rank #2 (Buy)

Read the Full Research Report on RCI

Read the Full Research Report on BBRY

Read the Full Research Report on T

Read the Full Research Report on CBS

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