The third-quarter 2016 earnings season is almost nearing its end with the majority of results already released, and most companies surpassing estimates. Moreover, earnings have entered the green zone overshadowing the initial predictions of being in the negative. As per our latest Earnings Outlook, third-quarter earnings are expected to rise 3% from the same period last year buoyed by 1.5% higher revenues.
Given the optimistic earnings picture, this earnings season is on track to be the first quarter to see positive earnings growth after five consecutive quarters of decline. Moreover, we expect the trend to continue in the upcoming quarters as the fourth-quarter earnings are projected to increase 3.7% year over year.
Telecom Stocks’ Earnings in Focus
The telecom industry, which comprises telecom operators and equipment manufacturers, is part of the widely diversified Computer & Technology sector. Per the latest report, in the Q3 earnings season, nearly 73.8% of the Computer & Technology companies have already reported their third-quarter results, out of which 82.2% beat earnings and 75.6% surpassed revenue estimates. Total earnings for these companies climbed 5% while revenues increased 2.5% year over year. Also, companies operating in this space are anticipated to benefit from continuous technological advancement and adoption of newer business models.
Let’s take a look at three telecom stocks that are scheduled to report their third-quarter numbers on Nov 8.
ViaSat Inc. : ViaSat is engaged in designing, producing and marketing advanced digital satellite telecommunications and other networking and signal processing equipment. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ViaSat has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 2 cents per share. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Meanwhile, according to our proven model, a company needs the right combination of two key ingredients – a positive earnings ESP and a Zacks Rank #3 or better – to increase the odds of an earnings surprise. Thus, ViaSat is unlikely to beat the Zacks Consensus Estimate this quarter.
Zayo Group Holdings Inc. (ZAYO - Free Report) : Zayo Group is a provider of bandwidth infrastructure services, including dark fiber, wavelengths, SONET, Ethernet, IP services, and carrier-neutral colocation and interconnection. The company currently carries a Zacks Rank #3.
Importantly, the company has an earnings ESP of +20% (Most accurate estimate is 6 cents while the Zacks Consensus Estimate is pegged lower at 5 cents). The combination of Zayo Group Holdings’ Zacks Rank #3 and +20% ESP makes us reasonably confident of an earnings beat this quarter.
ClearOne Inc. : ClearOne operates as a provider of audio-visual communications. This Zacks Rank #3 company designs, develops and markets conferencing, collaboration, streaming and digital signage solutions for audio, video and data multimedia communication.
ClearOne carries an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 19 cents. Therefore, this stock is unlikely to beat the Zacks Consensus Estimate this quarter.
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