Canada’s leading communication service provider, BCE Inc. BCE, is slated to report its second-quarter 2015 quarterly numbers before the opening bell on Aug 6.
In the last reported quarter, the company posted a positive 11.11% earnings surprise. Moreover, the company surpassed the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 2.78%. Let’s see how things are shaping up prior to this announcement.
Factors to be Considered this Quarter
BCE’s local line access for traditional telephony service continues to face a decline among large customers due to higher wireless substitution and migration to IP-based services. Moreover, persistent loss of large business customers in Network Access service is likely to affect the company’s wireline segment. Adding to the woes, stiff pricing competition and union issues might further hurt the stock.
On the wireline front, BCE expects financial results to improve in 2015 and beyond on an increase in net revenue generation units. The positive EBITDA growth trend at the segment is also expected to continue. Additionally, BCE continues to leverage from Fibe TV and FibreOP TV growth, price hike and an improved business market stemming from a steady economy.
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.
Zacks ESP: Earnings ESP for BCE stands at -2.90% as the Most Accurate estimate is 67 cents while the Zacks Consensus Estimate is pegged higher at 69 cents.
Zacks Rank: BCE carries a Zacks Rank #4 (Sell). 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 companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.
Ashford Hospitality Trust, Inc. AHT with an Earnings ESP of +8.70% and a Zacks Rank #1 (Strong Buy).
The Walt Disney Company DIS with an Earnings ESP of +2.16% and a Zacks Rank #3 (Hold).
L Brands, Inc. LB with an Earnings ESP of +2.99% and a Zacks Rank #3.
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