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Rogers Communications (RCI) Q3 Earnings: A Beat in Store?


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Rogers Communications Inc. (RCI - Analyst Report) , the largest integrated telecom operator in Canada, is slated to report third-quarter 2016 results, before the opening bell on Oct 20.

Last quarter, Rogers Communications posted a negative earnings surprise of 3.12%. Moreover, the company’s earnings lagged the Zacks Consensus Estimate in three of the previous four quarters, with an average miss of 3.95%. Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Rogers Communications is likely to beat estimates because it has the right combination of two key elements.

Zacks ESP: Rogers Communications has an Earnings ESP of +1.49%. This is because the Most Accurate estimate stands at 68 cents while the Zacks Consensus Estimate is pegged lower at 67 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: Rogers Communications has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Rogers Communications’ Zacks Rank #3 and +1.49% ESP makes us confident of an earnings beat at the company. You can see the complete list of today’s Zacks #1 Rank stocks here.

What is Driving the Better-than-Expected Earnings?

Rogers Communications is the first wireless operator in Canada to offer “Internet of Things” (IoT) as a service to business enterprises. End-to-End Incident Management, Farm & Food Monitoring and Level Monitoring are the IoT services it presently offers. Rogers Communications’ decision to purchase broadcasting company – Tillsonburg Broadcasting Company Limited (TBCL) – bodes well. The company’s newly launched cost-effective, simple and competitive IaaS Cloud services and Rogers Unison (a new mobile solution) have recorded an increase in postpaid wireless and Internet subscriber count. The company has also been focusing on the business enterprise segment. Rogers Communications also announced that it will provide Rogers Unison, a new mobile solution with features of a traditional landline phone, to small businesses. Moreover, the company aims to launch Internet TV services with 4K picture quality by the end of 2016.

However, Rogers Communications continues to operate in a highly competitive wireless market of Canada with incumbents like TELUS Corp. (TU - Analyst Report) and BCE Inc. (BCE - Analyst Report) and other small regional cable TV operators. Moreover, Shaw Communications’ entry into the market with the WIND Mobile acquisition has intensified competition. Additionally, persistent softness in the advertising market and loss of viewers to video streaming service providers are potent headwinds. Loss incurred from the shutdown of the Shomi video streaming service is another concern.

ROGERS COMM CLB Price and EPS Surprise



Another Stock to Consider

Here's another company that has the right combination of elements to post an earnings beat this quarter.

Windstream Holdings Inc. (WIN - Analyst Report) , with an earnings ESP of +2.56% and a Zacks Rank #1. The company’s earnings surpassed the Zacks Consensus Estimate in all of the previous four quarters.

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