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Intelsat (I) to Report Q3 Earnings: What's in the Offing?

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Intelsat S.A. is set to report third-quarter 2018 results before the opening bell on Oct 30. In the last reported quarter, the company’s loss was narrower than the Zacks Consensus Estimate of loss by 26.9%. Notably, Intelsat has a woeful earnings history in the trailing four quarters with an average negative surprise of 72.1%.

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

Factors to Consider

Intelsat aims to leverage its expansive ground networks, growing managed services platform and strong government and commercial business relationships to improve its top line. At the same time, the company intends to lead the industry through seamless integration of satellite-based telecommunication solutions with the global telecommunications infrastructure. Intelsat is focusing more on software-defined satellite designs to lower costs and streamline manufacturing process.

The company is specifically targeting lower capital investments over a three-year period from 2018 due to replacement of bigger satellites with smaller ones. Incorporating innovative designs, the new fleet will enable the company to remain commercially flexible, maintain a strong competitive position at lower operating costs.

However, despite the efforts, Intelsat is likely to report lower revenues on a year-over-year basis owing to non-renewals and contraction of services. The company is expected to record non-renewal of point-to-point international trunking services and cellular backhaul services from emerging markets. The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $524 million. The company reported revenues of $539 million in the year-earlier quarter.

Increased uncertainty over the implementation of its policy goals, including launch of newly-designed satellites have clouded the earnings picture. This communications and satellite company is expected to post quarterly loss of 34 cents per share, which represents a year-over-year decline of 30.8%.

Earnings Whispers

Our proven model does not conclusively show that Intelsat is likely to beat earnings this quarter as it does not possess the key components. 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. This is not the case here as you will see below:

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at a loss of 34 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Intelsat S.A. Price and EPS Surprise


Intelsat S.A. Price and EPS Surprise | Intelsat S.A. Quote

Zacks Rank: Intelsat has a Zacks Rank #3. While this increases the predictive power of ESP, we need to have a positive ESP to make us reasonably confident of an earnings beat.

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

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Windstream Holdings, Inc. is slated to release quarterly numbers on Nov 8. It has an Earnings ESP of +10.79% and a Zacks Rank #3.

United States Cellular Corporation (USM - Free Report) is likely to release results around Nov 14. The company has an Earnings ESP of +57.45% and sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for CenturyLink, Inc. (CTL - Free Report) is +10.29% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 8.

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