Leading Canadian telecom service provider TELUS Corporation TU is slated to release its second-quarter 2015 results before the market opens on Aug 7.
Last quarter, TELUS had delivered a 7.41% positive earnings surprise. Moreover, the company’s earnings have outpaced the Zacks Consensus Estimate in three of the past four quarters with an average beat of 1.51%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
TELUS stole the show in Canada’s latest wireless spectrum auction for the sale of 2.5 GHz airwaves to be used for smartphones and other mobile devices. The company shelled out C$478.82 million for 122 licenses in the 2.5 GHz band. We expect continuous acquisition of spectrum to enhance the company’s market share and drive revenues and subscriber gain, going ahead.
Moreover, strong prospects in the Wireless segment, the company’s investments in cloud-based offerings and Internet of Things (IoT) marketplace are certain factors that are likely to impact the quarter favorably.
On the flip side, heightened wireless competition, the Canadian government’s new wireless policy, increasing prepaid subscriber churn, continuous loss of local access lines and a highly leveraged balance sheet might continue to weigh on the to-be-reported quarter’s performance.
Earnings Whispers
Our proven model does not conclusively show that TELUS 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: TELUS’s earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 51 cents.
Zacks Rank: TELUS has a Zacks Rank #4 (Sell). Note that, we caution against stocks with a Zacks Rank #4 or 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:
Amtech Systems Inc. ASYS, with an Earnings ESP of +8.00% and a Zacks Rank #3.
SunEdison Inc. SUNE, with an Earnings ESP of +13.33% and a Zacks Rank #3.
2U Inc. TWOU, with an Earnings ESP of +3.57% and a Zacks Rank #3.
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