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Ericsson (ERIC) to Report Q3 Earnings: What Lies Ahead?
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Ericsson (ERIC - Free Report) is scheduled to report third-quarter 2018 results before the opening bell on Oct 18. The company has a bleak earnings history with three colossal earnings misses in the trailing four quarters, with an average negative surprise of 291.7%.
Let's see how things are shaping up for this announcement.
Factors to Consider
The information and communications technology solutions provider has been grappling with shrinking markets and stiff competition from other established players in the market. Further, spectrum crunch has become a major issue in the U.S. telecom industry that has a saturated wireless market. Moreover, slowdown in spending by wireless carriers severely hurt the company’s financials over the past few quarters and will likely affect the upcoming quarterly results as well.
Most of the company’s troubles have stemmed from the drying up of investments by major telecom-equipment makers across the world. The company’s revenues and margins in the Networks and IT & Cloud segments are likely to take a beating from adverse industry trends. Soft mobile broadband demand and slowdown in emerging markets will continue to significantly dent Ericsson’s performance. These factors will likely manifest in the company’s sales in the to-be-reported quarter.
To add to these woes, Ericsson foresees sustained weakness in the market for radio access networks. Network equipment sales, particularly in North America and Europe, continue to contract. Europe and Latin America — the markets with the biggest impact — are anticipated to have an increasingly challenging investment environment in the quarters to come. In addition, the trade tariffs imposed by the Trump administration are expected to impact its sales in China unfavorably.
Despite these challenges, Ericsson remains the world’s largest supplier of LTE technology, with significant market share and a large number of LTE networks worldwide. The company envisions healthy traction in its 4G portfolio and 5G deployments. At the same time, Ericsson is continuing with steady investments in R&D, technology leadership and gross margin improvement. The company is stabilizing its IT, cloud and project portfolio by managing existing contracts and investing in automation.
In addition, Ericsson is focusing on a new restructuring plan to cut costs and streamline operations, as well as explore options for the media business. The company’s “cost and efficiency program” has been devised to generate higher cost savings. Ericsson is working to intensify its cost-streamlining efforts, with focus on structural changes which will likely help generate lasting efficiency gains and boost cost competitiveness.
Ericsson is seeking to seize business opportunities as operators shift toward 5G deployments. The company plans to focus more intently on software sales and recurring business that complements its thriving Professional Services business in terms of “targeted growth” investments. Ericsson expects to be better equipped in order to address the varied needs of its customer segments and tap new markets to foster growth. The company believes standardization of 5G is the cornerstone for digitization of industries and broadband.
Ericsson has undertaken notable endeavors to position itself as a leading provider of equipment and services in 5G technology. During the Sep-end quarter, the company inked a $3.5-billion multi-year deal with T-Mobile US, Inc. to support the nationwide 5G network deployment of the latter. Per the agreement, it will provide the U.S. mobile carrier with the latest 5G New Radio hardware and software, compliant with the 3rd Generation Partnership Project standards. The company has also signed an agreement with Swisscom AG to provide an end-to-end 5G IP transport network to the clients of the latter. Leveraging Ericsson's Router 6000, this telecommunications provider in Switzerland aims to provide end-to-end 5G transport network from radio base stations to data centers, in a bid to augment capacity, add automation and provide advanced features for its radio and core networks.
With such concerted efforts, Ericsson expects to be better equipped to address the varied needs of its customer segments and capitalize on the market opportunities for improved bottom line in the quarter.
Earnings Whispers
Our proven model conclusively shows that Ericsson is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and Zacks Consensus Estimate, is +14.29%, with the latter pegged at 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Ericsson has a Zacks Rank #3, currently. This increases the predictive power of ESP and makes us reasonably confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Sprint Corporation (S - Free Report) is likely to report earnings around Oct 24. It has an Earnings ESP of +63.88% and a Zacks Rank #3.
The Earnings ESP for CenturyLink, Inc. is +6.10% and it carries a Zacks Rank of 3. The company is expected to report quarterly numbers around Nov 14.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Ericsson (ERIC) to Report Q3 Earnings: What Lies Ahead?
Ericsson (ERIC - Free Report) is scheduled to report third-quarter 2018 results before the opening bell on Oct 18. The company has a bleak earnings history with three colossal earnings misses in the trailing four quarters, with an average negative surprise of 291.7%.
Let's see how things are shaping up for this announcement.
Factors to Consider
The information and communications technology solutions provider has been grappling with shrinking markets and stiff competition from other established players in the market. Further, spectrum crunch has become a major issue in the U.S. telecom industry that has a saturated wireless market. Moreover, slowdown in spending by wireless carriers severely hurt the company’s financials over the past few quarters and will likely affect the upcoming quarterly results as well.
Most of the company’s troubles have stemmed from the drying up of investments by major telecom-equipment makers across the world. The company’s revenues and margins in the Networks and IT & Cloud segments are likely to take a beating from adverse industry trends. Soft mobile broadband demand and slowdown in emerging markets will continue to significantly dent Ericsson’s performance. These factors will likely manifest in the company’s sales in the to-be-reported quarter.
To add to these woes, Ericsson foresees sustained weakness in the market for radio access networks. Network equipment sales, particularly in North America and Europe, continue to contract. Europe and Latin America — the markets with the biggest impact — are anticipated to have an increasingly challenging investment environment in the quarters to come. In addition, the trade tariffs imposed by the Trump administration are expected to impact its sales in China unfavorably.
Despite these challenges, Ericsson remains the world’s largest supplier of LTE technology, with significant market share and a large number of LTE networks worldwide. The company envisions healthy traction in its 4G portfolio and 5G deployments. At the same time, Ericsson is continuing with steady investments in R&D, technology leadership and gross margin improvement. The company is stabilizing its IT, cloud and project portfolio by managing existing contracts and investing in automation.
In addition, Ericsson is focusing on a new restructuring plan to cut costs and streamline operations, as well as explore options for the media business. The company’s “cost and efficiency program” has been devised to generate higher cost savings. Ericsson is working to intensify its cost-streamlining efforts, with focus on structural changes which will likely help generate lasting efficiency gains and boost cost competitiveness.
Ericsson is seeking to seize business opportunities as operators shift toward 5G deployments. The company plans to focus more intently on software sales and recurring business that complements its thriving Professional Services business in terms of “targeted growth” investments. Ericsson expects to be better equipped in order to address the varied needs of its customer segments and tap new markets to foster growth. The company believes standardization of 5G is the cornerstone for digitization of industries and broadband.
Ericsson has undertaken notable endeavors to position itself as a leading provider of equipment and services in 5G technology. During the Sep-end quarter, the company inked a $3.5-billion multi-year deal with T-Mobile US, Inc. to support the nationwide 5G network deployment of the latter. Per the agreement, it will provide the U.S. mobile carrier with the latest 5G New Radio hardware and software, compliant with the 3rd Generation Partnership Project standards. The company has also signed an agreement with Swisscom AG to provide an end-to-end 5G IP transport network to the clients of the latter. Leveraging Ericsson's Router 6000, this telecommunications provider in Switzerland aims to provide end-to-end 5G transport network from radio base stations to data centers, in a bid to augment capacity, add automation and provide advanced features for its radio and core networks.
With such concerted efforts, Ericsson expects to be better equipped to address the varied needs of its customer segments and capitalize on the market opportunities for improved bottom line in the quarter.
Earnings Whispers
Our proven model conclusively shows that Ericsson is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and Zacks Consensus Estimate, is +14.29%, with the latter pegged at 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ericsson Price and EPS Surprise
Ericsson Price and EPS Surprise | Ericsson Quote
Zacks Rank: Ericsson has a Zacks Rank #3, currently. This increases the predictive power of ESP and makes us reasonably confident of an earnings beat.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Sprint Corporation (S - Free Report) is likely to report earnings around Oct 24. It has an Earnings ESP of +63.88% and a Zacks Rank #3.
United States Cellular Corporation (USM - Free Report) is likely to release results around Nov 14. The company has an Earnings ESP of +57.45% and sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for CenturyLink, Inc. is +6.10% and it carries a Zacks Rank of 3. The company is expected to report quarterly numbers around Nov 14.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>