Back to top

Analyst Blog

Alcatel Lucent Inc. (ALU - Analyst Report) is set to report second quarter 2013 results on July 31. Last quarter it posted an 81.8% negative surprise. Let’s see how things are shaping up for this announcement.

Factors this Past Quarter

The company’s first-quarter results were not encouraging, as overall revenues dropped due to declines across its segments. In addition, gross margin was impacted by weakness of the U.S. dollar and an adverse impact from product and geographic mix.

Further, even after changing its chief executive officer twice, the company has failed to revive its earnings growth. In addition, Alcatel-Lucent has a credit rating of B3 from Moody’s Investors Service and B- at Standard and Poor's; both being six steps below investment grade ratings.

Earnings Whispers?

Our proven model does not conclusively show that Alcatel Lucent is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: (Read: Zacks Earnings ESP: A Better Method):  That is because the Most Accurate estimate stands at -$0.13, while the Zacks Consensus Estimate is -$0.12. That is a difference of -8.3%.

Zacks #3 Rank (Hold): Alcatel Lucent’s Zacks  Rank #5 (Strong Sell) lowers the predictive power of ESP because the Zacks Rank #5 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SIGNET JEWE… SIG 116.37 +7.72%
INSITE VISI… INSV 0.30 +7.11%
CHYRONHEGO… CHYR 2.72 +5.84%
US SILICA H… SLCA 70.72 +4.00%
MALLINCKROD… MNK 80.11 +2.32%