5 Telecom Stock Set To Beat Estimates This Earnings Season

Performance So Far

Per the latest Zacks Earnings Trend report, only 53 S&P 500 members have reported fourth-quarter earnings results as of Jan 19. Total earnings for these companies are up 11.7% from the same period last year on 7.5% higher revenues, with 81.1% beating EPS estimates and 75.5% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 62.3%.

The Q4 earnings season is on track and is expected to be very good. Four important points can be inferred from the results thus far. First, the +11.7% earnings growth for the 53 index members compares is about the same as the +11.9% growth in Q3 and modestly below the 4-quarter average of +12.8%. Second, the +7.5% revenue growth for these 53 index members represents a notable acceleration in growth momentum. Third, the 81.1% proportion of the companies beating EPS estimates in Q4 is the highest we have seen from these 53 index members in other recent periods. Fourth, the 75.5% of the companies beating revenues is similarly the highest we have seen from this group of companies in recent periods.

In the telecom space, so far, national wireless behemoth Verizon Communications has reported Q4 results. The result was a mixed bag. While the top line beat the Zacks Consensus Estimate, the bottom line lagged the same. Nevertheless, the carrier has witnessed significant net addition of postpaid wireless subscribers with reduced churn rate.

How to Make a Selection?

With the existence of a number of industry players, finding the right stocks that have the potential to beat earnings estimates could appear a difficult task, however, our proprietary methodology makes it fairly simple for you. One way to narrow down the list of choices during the earnings season is to look at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.

Earnings ESP is our proprietary methodology for identifying stocks that have high chances of surprising with their next earnings announcement. It shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Our research shows that for stocks with this combination, the chances of a positive earnings surprise are as high as 70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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