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Verizon Communication Inc. (VZ - Analyst Report) – the largest telecom operator in the U.S. – is set to release its first-quarter 2013 results before the opening bell on Apr 18, 2013.

In the last quarter, the company delivered a 28.3% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Verizon Communications has a strong foothold within the wireless and wireline sectors, with ample growth opportunities in the coming months. The company remains focused on improving profitability over the long term through the rapid evolution of 4G LTE, high smartphone sales, expansion of the FiOS network and strength in enterprise strategic services in areas such as global IP, cloud computing, security and managed services.

On the downside, persistent erosion in access lines, uncertain returns from investments, iPhone subsidies, hindrances in spectrum deals and intense competition may act as headwinds for Verizon, going forward.

Earnings Whispers

Our proven model does not conclusively show that Verizon Communications is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: This is because the Most Accurate Estimate is 65 cents, below the Zacks Consensus Estimate of 66 cents. This leads to an ESP of -1.52% for Verizon Communications.

Zacks Rank #3 (Hold): Verizon’s Zacks Rank #3 (Hold), decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks earnings ESP of -1.52% 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.

AT&T(T - Analyst Report) has Earnings ESP of +4.76% and carries a Zacks Rank #2 (Buy).

Research in Motion Limited (BBRY - Analyst Report) has Earnings ESP of +500% and carries a Zacks Rank #2 (Buy).

CBS Corporation (CBS - Analyst Report) has Earnings ESP of +1.47% and carries a Zacks Rank #2 (Buy).


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