Rogers Communications Inc. RCI is scheduled to report first-quarter 2015 financial numbers after the closing bell on Apr 20, 2015.
In the previous quarter, the company had reported a negative earnings surprise of 10.2%. Moreover, the company missed the Zacks Consensus Estimate in all of the past four quarters with an average negative surprise of 10.8%. Let’s see how things are shaping up for this announcement.
Factors to Influence this Quarter
Despite significant LTE network expansion, innovative service launches and an attractive dividend yield, stiff competition from local carriers and increasing churn rate are major concerns for the company. The company also has a highly leveraged balance sheet which may hinder growth to a certain extent.
On the bright side, Rogers Communications delivered solid data revenue growth in eight consecutive quarters and has also brought down smartphone subsidy costs through better management, thereby driving margins.
Earnings Whispers?
Our proven model does not conclusively show that Rogers Communications is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Rogers Communications has a Zacks ESP of -8.16%. This is because the Most Accurate estimate stands at 45 cents while the Zacks Consensus Estimate is pegged higher at 49 cents.
Zacks Rank: Rogers Communications carries a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some other companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:
Cogent Communications Holdings, Inc. CCOI with an Earnings ESP of +33.33% and a Zacks Rank #3 (Hold).
CenturyLink, Inc. CTL with an Earnings ESP of +1.70% and a Zacks Rank #3.
Telecom Argentina S.A. TEO with earnings an Earnings ESP of +8.93% and a Zacks Rank #3.
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