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Will NII Holdings (NIHD) Beat Earnings?

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Latin American telecom carrier NII Holdings Inc. is set to release its second-quarter 2013 results before the market opens on Aug 1, 2013.

In the last quarter, the company delivered a 2.94% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered This Quarter

Stiff competition in the Latin American market remains the primary cause of concern for NIHD. While key competitors like Telefonica and America Movil are aggressively deploying next-generation wireless technologies in major Latin American markets, NIHD lags far behind in network deployment. High debt burden, increased promotional expenses and foreign exchange fluctuation remains other near-term concerns for NIHD.

However, NIHD combined with Motorola Mobility to launch Atrix HD smartphones in Mexico, which is preloaded with NIHD’s PTT service. NIHD’s Mexico customers will be able to enjoy the PTT service using a high-end smartphone. This will be a new source of revenue for the company.

Earnings Whispers

Our proven model does not conclusively show that NIHD 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 -$1.15 while the Zacks Consensus Estimate is lower at -$1.05. This leads to an ESP of -9.52% for NIHD.

Zacks Rank #3 (Hold): NIHD’s 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 -9.52% combined with a Zacks Rank #3 lowers the possibility of a positive 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 has Earnings ESP of +40.00% and carries a Zacks Rank #3 (Hold).

Leap Wireless International Inc. currently has Earnings ESP of +6.06% and holds a Zacks Rank #3 (Hold).

American Tower Corporation (AMT - Free Report) currently has Earnings ESP of +3.77% and holds a Zacks Rank #3 (Hold).

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