Canada’s leading communications service provider, BCE Inc. (BCE), is slated to report its third-quarter 2014 quarterly numbers before the opening bell on Nov 6, 2014.
In the last reported quarter, the company had delivered a negative 2.6% earnings surprise. Moreover, the company has lagged the Zacks Consensus Estimate in the three of the last four quarters, with an average miss of 1.3%. Let’s see how things are shaping up prior to this announcement.
Factors to be Considered This Quarter
BCE’s wireless segment is expected to benefit from a strong post-paid business which has added a substantial number of subscribers lately. Significant investments in network coverage, customer retention, attractive data plans, launch of new handsets along with the introduction of net protection are likely to drive customer addition and revenues further.
On the flip side, continuous loss of large business customers in Network Access service will affect its wireline segment. Moreover, the price cap rules introduced by the Canadian regulators are limiting rate increases and reducing the amount that incumbent carriers can charge competitors for accessing their network.
Earnings Whispers?
Our proven model does not conclusively show that BCE 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, that is not the case here, as elaborated below.
Negative Zacks ESP: BCE has an earnings ESP of -4.29% as the Most Accurate estimate stands at 67 cents while the consensus estimate is pegged higher at 70 cents. Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate.
Zacks Rank: BCE has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.
Note that 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.
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.
Lumos Networks Corp. (LMOS), earnings ESP of +15.39% and a Zacks Rank #2 (Buy).
CenturyLink, Inc. (CTL), earnings ESP of +1.61% and a Zacks Rank #3.
Entravision Communications Corp. (EVC), earnings ESP of +22.22% and a Zacks Rank #3.
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