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Telephone and Data Systems (TDS): Q2 Earnings Preview
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Telephone and Data Systems Inc. (TDS - Free Report) , a leading provider of telecommunications services, is slated to report second-quarter 2016 results on Aug 5, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 50.00%. However, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 649.02%. Let’s see how things are shaping up for this announcement.
Telephone & Data Systems is striving to expand its business in the managed hosting and cloud service market. Providing a new cloud-based storage service should help the company arrest churn by creating an add-on revenue stream and drawing new broadband customers. Meanwhile, the company’s wireless business is expected to record strong results owing to increased handset offerings, shared data plans for consumers and businesses, equipment financing and expansion of the LTE technology. Telephone and Data Systems’ cash position and liquidity are also impressive because of its flexibility and vast scope for investments.
In June this year, Telephone and Data Systems earned a position in Fortune 500’s annual list of the largest corporations in the United States, in terms of revenues. Meanwhile, Telephone and Data Systems’ subsidiary, OneNeck IT Solutions, recently signed a multi-year contract with Braun Intertec to become the latter’s hybrid IT partner.
However, intense competition and roaming revenues related woes raise concern. Additionally, high costs associated with network integration and construction of new cell sites, aggressive equipment pricing, expansion of capacity in existing cell sites, wireless technology upgrades and spectrum licensing are also likely to exert pressure on the company’s finances.
Earnings Whispers
Our proven model does not conclusively show that Telephone and Data Systems 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: Telephone and Data Systems has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 16 cents.
Zacks Rank: Telephone and Data Systems has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile,we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may consider instead as our model shows that they have the right combination of elements to post an earnings beat this quarter.
MKS Instruments Inc. (MKSI - Free Report) , with an earnings ESP of +2.60% and a Zacks Rank #1.
Plexus Corp. (PLXS - Free Report) , with an earnings ESP of +1.25% and a Zacks Rank #2.
CDK Global, Inc. , with an earnings ESP of +2.08% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Telephone and Data Systems (TDS): Q2 Earnings Preview
Telephone and Data Systems Inc. (TDS - Free Report) , a leading provider of telecommunications services, is slated to report second-quarter 2016 results on Aug 5, before the opening bell.
Last quarter, the company posted a negative earnings surprise of 50.00%. However, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 649.02%. Let’s see how things are shaping up for this announcement.
TELEPHONE &DATA Price and EPS Surprise
TELEPHONE &DATA Price and EPS Surprise | TELEPHONE &DATA Quote
Factors at Play
Telephone & Data Systems is striving to expand its business in the managed hosting and cloud service market. Providing a new cloud-based storage service should help the company arrest churn by creating an add-on revenue stream and drawing new broadband customers. Meanwhile, the company’s wireless business is expected to record strong results owing to increased handset offerings, shared data plans for consumers and businesses, equipment financing and expansion of the LTE technology. Telephone and Data Systems’ cash position and liquidity are also impressive because of its flexibility and vast scope for investments.
In June this year, Telephone and Data Systems earned a position in Fortune 500’s annual list of the largest corporations in the United States, in terms of revenues. Meanwhile, Telephone and Data Systems’ subsidiary, OneNeck IT Solutions, recently signed a multi-year contract with Braun Intertec to become the latter’s hybrid IT partner.
However, intense competition and roaming revenues related woes raise concern. Additionally, high costs associated with network integration and construction of new cell sites, aggressive equipment pricing, expansion of capacity in existing cell sites, wireless technology upgrades and spectrum licensing are also likely to exert pressure on the company’s finances.
Earnings Whispers
Our proven model does not conclusively show that Telephone and Data Systems 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: Telephone and Data Systems has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 16 cents.
Zacks Rank: Telephone and Data Systems has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
Meanwhile,we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may consider instead as our model shows that they have the right combination of elements to post an earnings beat this quarter.
MKS Instruments Inc. (MKSI - Free Report) , with an earnings ESP of +2.60% and a Zacks Rank #1.
Plexus Corp. (PLXS - Free Report) , with an earnings ESP of +1.25% and a Zacks Rank #2.
CDK Global, Inc. , with an earnings ESP of +2.08% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>