Sprint Corporation S is set to report its first-quarter fiscal 2015 financial numbers before the opening bell on Aug 4.
Last quarter, the company posted a 50% negative earnings surprise. Let’s see how Sprint is positioned prior to the fiscal first-quarter’s announcement.
Why a Likely Positive Surprise?
Our proven model shows that Sprint is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP for Sprint stands at +25.0%. This is because the Most Accurate estimate is pegged at a loss of 6 cents while the Zacks Consensus Estimate stands at a loss of 8 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Sprint currently carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1, #2 or #3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Sprint’s Zacks Rank #3 and +25.0% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
We expect Sprint to report better-than-expected earnings backed by the company’s relentless focus on reviving its customer base after a prolonged period of high customer churn. In order to check churn and gain customers from other industry players, Sprint is introducing new plans with higher data provision.
Also, toward this objective, Sprint has extended its existing Slash Your Payment in Half promotional policy to its prepaid wireless subsidiary – Boost Mobile. Further, Boost Mobile has decided to reduce the phone bills of T-Mobile’s MetroPCS and AT&T’s Cricket customers by 50%, if they switch to its service. Such a promotional strategy will likely help the company add customers and boost revenues.
However, such extensive investments will substantially escalate the company’s marketing expenses.
Other Stocks to Consider
Here are some companies worth considering as our model shows these have the right combination of elements to post an earnings beat this quarter:
Ashford Hospitality Trust, Inc. AHT has an earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).
Ryanair Holdings plc RYAAY has an earnings ESP of +2.11% and a Zacks Rank #1.
The Walt Disney Company DIS has an earnings ESP of +2.16% and a Zacks Rank #3.
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