The earnings season has already started and the picture, so far, appears to be encouraging. Per the Earnings Preview dated Jan 26, nearly 133 of the S&P 500 members have reported their results. Out of these companies, approximately 81.2% delivered positive earnings surprises, while 78.9% surpassed top-line expectations.
Notably, earnings for the 133 S&P 500 companies have advanced 12.3% from the comparable year-ago period, while revenues increased 8.8%. Further, the report suggests that earnings for the total S&P 500 companies for the fourth quarter are projected to improve 11.6% year over year, with total revenues increasing 7.5%.
Telecom Stocks Continue to Outperform
The telecom industry witnessed strong performances by most of the key stocks last week.
On the earnings front, U.S. telecom behemoth Verizon Communications Inc. VZ reported mixed financial numbers in the fourth quarter of 2017. While the top line beat the Zacks Consensus Estimate, the bottom line lagged the same.
Comcast Corp. CMCSA, the largest cable multi-service operator, delivered impressive financial results in the fourth quarter of 2017, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate.
Stocks to Watch for Q4 Earnings on Jan 30
Our quantitative model offers some insight into stocks that are about to report their earnings. Per the model, a stock needs to have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, to deliver earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, we also caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Investors interested in the telecommunication stocks can watch out for the three companies that are expected to report fourth-quarter numbers on Jan 30.
Harris Corp. HRS, a leading technology innovator, solving customers' toughest mission-critical challenges by providing solutions that connect, inform and protect, is slated to report second-quarter fiscal 2018 results, before the market opens.
We expect the company to post earnings of $1.40 per share and revenues of $1.48 billion. Estimates, when compared with the year-ago quarter figures, represent decrease of 1.4% and 12.7% for earnings and revenues, respectively.
We expect the company’s Space and Intelligence Systems unit to perform well in the to-be-reported quarter. Higher volumes, impressive program performance and operational efficiencies are likely to drive segmental results.
Moreover, the chances of this company beating the Zacks Consensus Estimate in the quarter under review are high. The company has an Earnings ESP of +0.11%. Notably, a favorable Earnings ESP indicates a positive earnings surprise.
Moreover, Harris currently carries a Zacks Rank #2 (Buy), which increases the predictive power of the ESP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, a positive Earnings ESP along with a Zacks Rank #2, makes us reasonably confident of an earnings beat in the to-be-reported quarter (read more: Will a Strong Product Line Drive Harris (HRS) Q2 Earnings?)
Let’s take a sneak peek at Corning Inc. GLW, which is set to report fourth-quarter fiscal 2017 results. The Zacks Consensus Estimate for the quarter is pegged at 47 cents, reflecting a year-over-year decrease of 6%. Notably, the earnings estimates have moved north over the last 30 days. Further, Zacks Consensus Estimate for revenues is pegged at $2.63 billion, up roughly 3.2% from the year-ago quarter.
We expect Corning’s results to be driven by strength in the optical communications segment, primarily owing to strong demand for fiber products. Moreover, solid demand for Gorilla Glass 5, expanding footprint in the automotive market and acquisition of 3M’s communication market division are other catalysts.
Moreover, the chances of this company beating the Zacks Consensus Estimate in the quarter under review are high. The company has an Earnings ESP of +1.70%. A favorable Earnings ESP indicates a positive earnings surprise.
Moreover, Corningcurrently carries a Zacks Rank #3, which increases the predictive power of the ESP. (read more: Corning (GLW) to Post Q4 Earnings: What's in the Offing?)
Lastly, Juniper Networks, Inc. JNPR is scheduled to release fourth-quarter fiscal 2017 earnings numbers. The Zacks Consensus Estimate for the quarter is pegged at 52 cents, reflecting a year-over-year decrease of 21.2%. Further, Zacks Consensus Estimate for revenues is pegged at $1.23 billion, down roughly 10.9% from the year-ago quarter.
Juniper’s cloud customer base continues to expand. Of the top 10 customers, five were cloud while four were Telecom/Cable. The company has witnessed accelerated demand and adoption of its Software Defined Secure networks (“SDSN”) platforms. Juniper completed the acquisition of Cyphort, a leader in automated malware analysis and detection. This is expected to drive the top line in the near term.
Nonetheless, Juniper is facing significant pricing pressure amid intensifying competition in the network equipment market from the likes of Arista Networks Inc, Cisco Systems Inc and others including white-box vendors.
Moreover, the chances of this company beating the Zacks Consensus Estimate in the quarter under review are low. The company has an Earnings ESP of +2.68%. A favorable Earnings ESP indicates a positive earnings surprise.
However, Junipercurrently carries a Zacks Rank #4 (Sell), which decreases the predictive power of the ESP (read more: What's in the Cards for Juniper (JNPR) This Earnings Season?).
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