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Frontier Communications (FTR) Q2 Earnings: What's in Store?

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Frontier Communications Corporation (FTR - Free Report) , a leading regional telecommunication company in the U.S., is scheduled to report second-quarter 2017 financial numbers on Aug 1, after market closes.

Last quarter, the company posted a negative earnings surprise of 60%. Moreover, the company’s earnings failed to surpass the Zacks Consensus Estimate in three of the last four quarters, with an average miss of 8.33%.

Let’s see how things are shaping up for this announcement.

Factors at Play        

The price performance of Frontier Communications has been depressing over the last three months. The stock lost 43.2%, whereas the industry declined 25% over the same time frame.

The company remains significantly challenged by slow economic recovery in its service territories and competes with the loss of legacy fixed telephony business to wireless and other offerings. The persistent decline in access lines continues to impact local service revenues, which accounts for most of Frontier Communications’ overall revenues.

Frontier Communications faces persistant problems in relation to the wireline assets it purchased from Verizon Communications Inc. (VZ - Free Report) in California, Florida and Texas. The company has been facing outages, poor telephone services and billing problems.Thus, improper integration of these assets may induce operational inefficiencies going forward.

However, the company's focus to rake in more profits through customer retention, market share gain, new product introductions, broadband expansion and improved sales and marketing initiatives is impressive. The company is trying to derive benefits from the growing Business Service segment. Meanwhile, foraying into North Carolina through the rollout of ‘Vantage TV’ IPTV and broadband services also bode well.

Earnings Whispers                                                                 

Our proven model does not conclusively show that Frontier Communications is likely to beat on earnings 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. That is not the case here, as you will see below.

Zacks ESP: Frontier Communications has an Earnings ESP of -14.95%. This is because the Most Accurate estimate stands at a wider loss of $1.23 than the Zacks Consensus Estimate of a loss of $1.07. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: Frontier Communications carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s -14.95% ESP makes surprise prediction difficult.

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.

Stocks to Consider

Here are some companies from the above industry you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

BCE, Inc, (BCE - Free Report) has an earnings ESP of +4.55 % and holds a Zacks Rank #2. The company is scheduled to release second-quarter 2017 results on Aug 3.

New Jersey Resources Corporation (NJR - Free Report) has an earnings ESP of +700% and holds a Zacks Rank #2. The company is scheduled to release second-quarter 2017 results on Aug 2.

You can see the complete list of today’s Zacks #1 Rank stocks here

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