Ericsson (ERIC) is slated to report fourth-quarter and full year 2014 results on Jan 27.
Last quarter, the company posted a negative surprise of 7.69%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Ericsson has been moving on an irregular growth track and has missed earnings twice in last four reported quarters. Sluggish Networks and Global Services business primarily remained the headwinds and has been bothering the company’s financials. Also, political and economical unrest in its operating countriescontinue to pose a threat for Ericsson.
Although Ericsson is working towards enhancing its Networks and Global Services by cracking international deals and strengthening the existing associations, the move is adding to its near term operating expenses. Moreover, tough competition for various big multinational wireless telecom service providers as well as newly established companies add to the woes.
Earnings Whispers?
Our proven model does not conclusively show that Ericsson will beat earnings this season. 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. This is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 25 cents. Hence, the difference is 0.00%.
Zacks Rank: Ericsson’s Zacks Rank #4 (Sell) when combined with 0.00% Earnings ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies that investors may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Century Aluminum Co. (CENX) has an Earnings ESP of +7.81% with a Zacks Rank #1.
Arch Capital Group Ltd. (ACGL) has an Earnings ESP of +1.92% with a Zacks Rank #1.
Horsehead Holding Corp. (ZINC) has an Earnings ESP of +8.33% with a Zacks Rank #3.
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