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Bear Of The Day: GTT Communications (GTT)

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GTT Communications (GTT - Free Report) is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.  Let's take a look at why it fell to the lowest Zacks Rank and if there are still some good qualities to this stock.  Spoiler alert, there are some good things ahead for GTT.

Description

GTT Communications provides cloud networking services to multinational enterprises, carriers, and government customers worldwide. . The company was formerly known as Global Telecom & Technology, Inc. and changed its name to GTT Communications, Inc. in January 2014. GTT Communications, Inc. was founded in 2005 and is headquartered in McLean, Virginia.

Recent Earnings

On May 3 of this year, the company missed the Zacks Consensus Estimate of a loss of 7 cents when they reported a loss of 12 cents.  That 5 cent miss translates to negative earnings surprise of 71%.  

An earnings miss like that will force analysts to incorporate that difference into their earnings models and it will often take down the annual estimate.  That five-cent miss, however, isn't enough to explain what happened to the 2018 Zacks Consensus Estimate.

Estimates

90 days ago, the Zacks Consensus Estimate was looking for a loss of 30 cents for the 2018 calendar year.  60 days ago, that number sank to a loss of $1.62, a huge negative revision to estimate for the current quarter and the next quarter were the main culprits.

That said, I see the estimate for next year is at $0.05.  So these losses are temporary and that is the silver lining to the Zacks Rank #5 (Strong Sell).  We know there is some pessimism on this stocks right now, but it won't last forever.

This will be a good stock to revisit in a few months when the estimate revisions that have hampered the stock are about to turn around.

Chart

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