Verizon Communications Inc. (VZ) is set to release its fourth-quarter 2013 results before the opening bell on Jan 21, 2014.
In the last quarter, the company delivered a 2.67% earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to Influence This Quarter
Verizon Communications has a strong foothold within the wireless and wireline sectors, with ample growth opportunities. Rapid evolution of 4G LTE and high smartphone sales as well as increased penetration of data plans will drive the company’s profitability over the long term.
Expansion of the FiOS network and strength in enterprise strategic service areas such as global IP, cloud computing, security and managed services will be accretive to the company’s wireline segment. The company is focused on improving its long-term profitability in the wireline business through product streamlining, process simplification initiatives and cost management.
However, persistent erosion in access lines due to competitive threat from VoIP service providers and cable companies remains a major headwind for Verizon. Further, iPhone subsidies, hindrances in spectrum deals and uncertain returns from investments are other risks for Verizon.
Earnings Whispers
Our proven model does not conclusively show that Verizon Communications is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks Rank: Verizon holds a Zacks Rank #3 (Hold) due to lack of directional movement.
Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are the same at 65 cents. This results in an of 0.00% earnings ESP for Verizon Communications and makes surprise prediction difficult for us. So we caution investors against the stock going into the earnings announcement.
Other Stocks to Consider
Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Cablevision Systems Inc. (CVC) with earnings ESP of +77.78% and Zacks Rank #1 (Strong Buy).
Sprint Corp.(S) with earnings ESP of +9.38% and Zacks Rank #3.
DIRECTV(DTV) with earnings ESP of +3.13% and Zacks Rank #3.
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