The telecommunications industry has been trending down over the past several quarters. The decline seems to have continued a bit in the first quarter of 2017 as well.

As per the Zacks Industry classification, the telecommunications industry is grouped under the Zacks-categorized broader Computer and Technology sector. Based on the Earnings Preview as of Apr 28, 48.4% of the sector’s participants have reported their quarterly numbers. Earnings for these companies increased 17.7% year over year while sales rose 6.2%. Comparatively, the 288 S&P 500 companies that reported through Apr 28 recorded 13.7% growth in earnings and an 8.2% rise in revenues. By the end of the first quarter, the technology sector’s earnings are projected to incline 13.9%, while revenues are expected to increase 6.1%. Meanwhile, total S&P 500 earnings and revenues are expected to improve 11.2% and 4.8% year over year, respectively.

Last week, we saw some of the major telecommunication companies such as Verizon Communications Inc. (VZ Quick QuoteVZ - Free Report) , AT&T Inc. (T Quick QuoteT - Free Report) , T-Mobile US Inc. (TMUS Quick QuoteTMUS - Free Report) , Corning Inc (GLW Quick QuoteGLW - Free Report) and Juniper Networks Inc. (JNPR Quick QuoteJNPR - Free Report) releasing their first-quarter 2017 financial results. The numbers were mixed with some reporting impressive financial results (both earnings and revenues surpassing the Zacks Consensus Estimate), while others disappointed. We expect the rest of this earnings season to be a mixed bag as well.

Under the Zacks classification, the telecommunications industry has two sub-divisions – telecommunications services and telecommunications equipment industry. Over the past one year, the price performance of the telecommunications industry albeit moderate, outperformed the S&P 500 index. The telecommunications services and telecommunications equipment industry gained 27.9% and 20.5%, respectively, compared with the S&P 500’s gain of 14.7%, over the same time frame.

Our quantitative model offers some insight into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key ingredients – a positive Earnings ESPand a Zacks Rank #3 (Hold) or better. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Let’s have a look at the four telecommunication companies that are gearing up to release their respective earnings results on May 3.

U.S. national wireless carrier Sprint Corp. (S Quick QuoteS - Free Report) will report fourth-quarter fiscal 2016 financial numbers before the opening bell on May 3. The company is expected to come up with a positive earnings surprise as it has an Earnings ESP of +25.00% (Most Accurate estimate stands at a loss of 3 cents while the Zacks Consensus Estimate is pegged at a loss of 4 cents) and carries a favorable Zacks Rank #3.

Last quarter, the company delivered a negative earnings surprise of 50.00%. However, the company’s bottom line surpassed the Zacks Consensus Estimate in two of the previous four quarters, with an average beat of 0.30% (read more: Sprint Poised to Beat Estimates this Earnings Season).

Level 3 Communications Inc. , the leading U.S. fiber-optic network service provider, will report first-quarter 2017 financial numbers, after the market closes on May 3.

The company has an Earnings ESP of -14.29%, with the Most Accurate estimate at 30 cents and the Zacks Consensus Estimate is pegged higher at 35 cents. It came up with positive earnings surprises in two of the last four quarters, with a positive beat of 3.40%. Level 3 Communications has a Zacks Rank #3.

Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult (read more: Can Level 3 Communications Q1 Earnings Surprise?).

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Florida-based, Harris Corporation which will report third-quarter fiscal 2017 results on May 3, before market open, has an Earnings ESP of +3.05% as the Most Accurate estimate is pegged at $1.35 per share while the Zacks Consensus Estimate is $1.31.

Also, the company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters, with an average beat of 2.72%. As per our model, a favorable Zacks Rank and positive ESP make us confident of an earnings beat in the to-be-reported quarter (read more: Is a Beat in the Cards for Harris in Q3 Earnings?).

North Carolina-based, Qorvo Inc. QRVO is an American semiconductor company that designs, manufactures, and supplies radio-frequency systems and solutions for applications that drive wireless and broadband communications, as well as foundry services.

The company is set to release fourth-quarter fiscal 2017 earnings results on May 3. Notably, the company beat the Zacks Consensus Estimate in the two of the trailing four quarters, with an average positive surprise of 7.18%.

Qorvo’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 71 cents per share (read more: Qorvo to Report Q4 Earnings: What's in the Cards?).

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