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Iridium (IRDM) to Report Q1 Earnings: What's in the Offing?

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Iridium Communications Inc. (IRDM - Free Report) is scheduled to report first-quarter 2019 financial results before the opening bell on Apr 23. In the last reported quarter, the company delivered a positive earnings surprise of 43.8%. Iridium surpassed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 51.9%.

The satellite phone company is likely to report higher revenues in the to-be-reported quarter on the back of healthy growth dynamics. Its service revenues, which mostly represent recurring revenues from an increasing subscriber base, are a huge positive.

Let’s find out how things are shaping up prior to the announcement.

Factors at Play

During the first quarter, Iridium completed its $3-billion satellite constellation upgrade campaign, Iridium NEXT. Management expects the completion of this program to likely be a new chapter for the company, one that will be a big cash generator. It is working toward a new growth phase that would deliver fresh sources of revenue and operational EBITDA growth, supporting significant free cash flow to benefit shareholders.

The company also launched a small-form-factor transceiver, the Iridium Certus 9770, which is likely to create new consumer and industrial applications that are portable and IoT-friendly. The expanded capabilities of satellites bolster Iridium’s market leadership position and extend offering of more powerful satellite solutions to customers.

For the first quarter, the Zacks Consensus Estimate for total revenues stands at $129 million, up from $119 million reported in the year-earlier quarter. Adjusted loss per share is pegged at 23 cents. The company reported earnings of 7 cents per share in the year-ago quarter.

What Our Model Says

Our proven model does not conclusively show that Iridium is likely to beat earnings this quarter as it does not possess one of the two 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: Iridium’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at a loss of 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Iridium Communications Inc Price and EPS Surprise

 

Zacks Rank: Iridium currently has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% Earnings ESP makes surprise prediction difficult.

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:

Juniper Networks, Inc. (JNPR - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

JAKKS Pacific, Inc. (JAKK - Free Report) has an Earnings ESP of +17.86% and a Zacks Rank #2.  

Digital Realty Trust, Inc. (DLR - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #2.  

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