JDS Uniphase Corporation (JDSU), a leading provider of communications test and measurement solutions, is slated to report its fiscal fourth-quarter 2014 earnings after the closing bell on Aug 12.
In the prior quarter, the company posted a positive earnings surprise of 50.0%. Let’s see how things are shaping up prior to this announcement.
Factors to Influence this Quarter
We believe that the Communications Test and Measurement division of JDS Uniphase will immensely benefit from the massive growth of wireless backhaul and DOCSIS 3.0 network deployment. Wireless carriers are gradually augmenting their backhaul capacity owing to significant growth of mobile Internet traffic and multimedia applications. As a result, cable operators are fast deploying DOCSIS 3.0 networks to retain competitiveness through provision of faster data access speeds.
However, on the downside, the ongoing global economic fluctuations may significantly affect the prospects of JDS Uniphase. Moreover, the consolidation trend of wireless networks and data centers may also impede the company’s growth in the coming quarters.
Earnings Whispers?
Our proven model does not conclusively show that JDS Uniphase 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 7 cents. Hence, the ESP is 0.00%.
Zacks Rank: JDS Uniphase's Zacks Rank #3 Increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions momentum.
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 in the respective upcoming quarters.
CatchMark Timber Trust, Inc. (CTT) with earnings ESP of +50.00% and a Zacks Rank #2.
Infosys Ltd. (INFY) with earnings ESP of +1.24% and a Zacks Rank #2.
Computer Sciences Corporation (CSC) with earnings ESP of +0.95% and a Zacks Rank #3.
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