Rogers Communications Inc. (RCI - Analyst Report), a leading telecom carrier in Canada, is set to release its second-quarter 2013 results after the market closes on Jul 24, 2013.
In the last quarter, the company delivered a 1.27% negative earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
New entrants in Canada’s wireless market are expected to provide stiff competition to Rogers in the region, where they have acquired spectrum by teaming up with rival carriers. BCE Inc.’s entry into cable TV services is expected to slash Rogers’ market share and cap margin expansion. Rogers’ Media segment could be affected by the continued softness in the advertising market and a double-digit revenue dip is expected in its Publishing division.
However, continuous expansion of Rogers’ LTE footprint along with the availability of various LTE-enabled devices will benefit the company’s Wireless segment. Furthermore, Rogers recently entered into an agreement with Shaw Communications to acquire Shaw’s cable systems in Hamilton and Ontario. It also aims to avail an option to purchase Shaw's Advanced Wireless Services (AWS) spectrum holdings in 2014. Shaw’s cable, Internet and telephone service will allow Rogers to expand its operations in Southern Ontario and provide cost synergies.
Our proven model does not conclusively show that Rogers Communications is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately this is not the case here as elaborated below.
Negative Zacks ESP: This is because the Most Accurate estimate stands at 93 cents while the Zacks Consensus Estimate is higher at 95 cents. This leads to an ESP of -2.11% for Rogers.
Zacks Rank #3 (Hold): Rogers’ Zacks Rank #3 decreases the predictive power of ESP.
We caution investors against the stock going into the earnings announcement, as a Zacks earnings ESP of -2.11% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.
Other Stocks to Consider
Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Cablevision Systems Corporation. (CVC - Analyst Report) has an Earnings ESP of +120.00% and carries a Zacks Rank #3 (Hold).
Apple Inc. (AAPL - Analyst Report) currently has an Earnings ESP of +2.19% and holds a Zacks Rank #3 (Hold).
CBS Corporation. (CBS - Analyst Report) currently has an Earnings ESP of +1.39% and holds a Zacks Rank #3 (Hold).