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Will BCE Inc (BCE) Surprise Investors this Earnings Season?

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Canada’s leading communication service provider, BCE Inc. (BCE - Free Report) , is slated to report its fourth-quarter 2015 financial numbers before the opening bell on Feb 4.

Last quarter, BCE had delivered a positive earnings surprise of 10.77%. Moreover, the company’s earnings have surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 6.54%. Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

BellCanada recently struck a deal with video streaming giant Netflix. Per the deal, all Fibe TV and FibreOP TV subscribers will be able to access their Netflix accounts directly through set-top boxes. Notably, the company expects its wireline segment to record EBITDA growth on gains from an increase in Fibe TV and FibreOP TV customer count.

In addition, Bell Media struck a long-term licensing deal with HBO. It will be the first company to solely deliver all HBO content. This expands the reach of the company’s lucrative suite of pay-TV channels which include The Movie Network and HBO Canada.

However, the company’s local line access for traditional telephony service continues to face a decline among large customers owing to higher wireless substitution and migration to IP-based services. Moreover, stiff competition from local peers like Shaw Communications Inc. (SJR - Free Report) and Roger Communications Inc. (RCI - Free Report) as well as union issues might continue to hurt profits.

Earnings Whispers

Our proven model does not conclusively show that Shaw Communications is likely to beat the Zacks Consensus Estimate this quarter. This is because 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: BCE has an earnings ESP of +1.96%. This is because the Most Accurate estimate is 52 cents while the Zacks Consensus Estimate is pegged lower at 51 cents.

Zacks Rank: BCE has a Zacks Rank #4 (Sell). Note that stocks with Zacks Rank #4 and 5 (Sell-rated stocks) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here is a company you may want to consider as our model shows it has the right combination of elements to post an earnings beat this quarter:

Solarwinds, Inc. (SWI - Free Report) has an earnings ESP of +2.27% and a Zacks Rank #1.

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