Telecom Stocks Q2 Earnings Roster for Aug 2: MSI, ANET, ATUS

The earnings season is past the halfway mark with 265 S&P 500 members having reported results till Jul 27. Sustained momentum reinforces expectations that second-quarter 2018 is likely to replicate the performance of the first quarter, which proved to be one of the strongest in the past seven years. Total earnings for the S&P 500 companies that have already reported are up 23.6% year over year on 10.1% higher revenues with 80.8% beating earnings estimates and 72.1% surpassing top-line expectations. Based on the hitherto observed pattern, the second quarter is anticipated to register healthy double-digit percentage earnings growth on a year-over-year basis.

Per the latest Earnings Preview, overall earnings for all the S&P 500 companies are expected to be up 23.6% on 8.8% growth in revenues. This represents an almost similar growth projection from the previous quarter, which recorded 24.6% earnings growth on 8.6% higher revenues, keeping in mind that actual results typically exceed estimates by 3-5%. Experts widely believe that earnings growth is likely to improve steadily until the end of 2019, as the effect of tax cuts gradually seep in.

The Technology sector, of which Telecom is part, appears to be quite strong. For the sector, earnings are expected to improve 30.6% year over year while revenues are touted to rise 11.8% due to healthy growth dynamics on the back of existing secular trends in cloud computing, artificial intelligence and Big Data.

Let’s take a sneak peek at three Telecom stocks scheduled to report second-quarter earnings on Aug 2 to see how things are shaping up for the upcoming results.

Motorola Solutions, Inc. MSI is scheduled to release results after the closing bell. With solid organic growth driven by continued strength in order trajectory and accretive acquisitions, Motorola is likely to record healthy top-line growth. The Zacks Consensus Estimate for total revenues for the quarter is pegged at $1,709 million, up from $1,497 million reported in the year-earlier quarter. (Read more: Motorola to Post Q2 Earnings: Is a Beat in Store?)

For the to-be-reported quarter, the company currently has an Earnings ESP of +0.37%, and Zacks Rank #2 (Buy), making us reasonably confident of an earnings beat. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Arista Networks, Inc. ANET is scheduled to report results after the closing bell. The company is benefiting from the expanding cloud networking market primarily driven by strong demand for scalable infrastructure, which has become a necessity to support new applications and services. Arista’s strategy of leveraging merchant silicon (“off the shelf”) from multiple suppliers has expanded product portfolio and increased its ability to offer products at cheaper prices. However, continued lawsuits have been a distraction for Arista. It has been forced to bring much of manufacturing in the United States, which along with redesigning of products have led to loss of time as well as hurt its profitability.

We remain inconclusive about an earnings beat prediction this quarter as it has an ESP of -1.89% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Altice USA, Inc. ATUS is slated to report results after the closing bell. The company is building a next-generation fiber network capable of delivering broadband speeds of 10 Gbps, reflecting its continued investment in technology and innovation for customers in the United States. However, Altice’s programming costs increased 2.5% year over year in first-quarter 2018 primarily due to a rise in contractual programming rates, partially offset by the decrease in video customers. We expect programming costs per customer to increase in the second quarter as well.

We remain inconclusive about an earnings beat prediction this quarter as it has an ESP of -128.26% and a Zacks Rank #4 (Sell).

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