) is set to report second-quarter 2014 results on Jul 18. Last
quarter, it posted a 6.67% negative surprise. Let's see how things
are shaping up for this announcement.
Factors Influencing This Quarter
Ericsson is the world's largest supplier of LTE technology with
approximately 13% market share and has established more than 150
LTE networks worldwide. The company's services are in demand by
operators to expand network coverage and to upgrade networks driven
by the rising demand for higher speed and capacity networks.
Recently, Ericsson pulled off the feat of attaining high speed 5
Gbps on a live network, while demonstrating its pre-standard 5G
network technology. Though, 5G networks are expected to take a few
more years to be available commercially, this achievement is
phenomenal for Ericsson. The high speed 5G network is of
significant importance to the telecom sector as it will not only
meet the exponentially increasing demand but will also be crucial
for the next-generation machine-to-machine applications.
Further, Ericsson has been making efforts to strengthen its
foothold in the broadcasting and media industry. To meet the
growing demand, the company is constructing a new campus in Silicon
Valley, which is expected to house about 2,000 employees devoted to
research and development in IP, TV and Media, SDN, NFV and mobile
innovation. Recently, Ericsson completed the acquisition of
U.K.-based media company Red Bee Media. In June, the company also
received a contract from T-Mobile U.S. Inc. for upgrading the
business and IT billing processes via its OSS/BSS software. This
will enable T-Mobile to deploy advanced IMS, IPTV, web services to
However, the recent unrest in Ukraine and Russia might affect
its business adversely given that the company derives a significant
portion of the revenues from business in these regions.
Our proven model does not conclusively show that Ericsson is
likely to beat earnings this quarter. That is because a stock needs
to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the
case here as you will see below.
The earning ESP stands at 0.00%. This is because both the Most
Accurate estimate and the Zacks Consensus Estimate stand at 14
Ericsson has a Zacks Rank #3 (Hold) but we need to have a positive
ESP to be confident about an earnings surprise. We caution
against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going
into the earnings announcement, especially when the company is
seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
earnings beat this quarter:
Arch Capital Group Ltd.
), with Earnings ESP of +6.32% and a Zacks Rank #1 (Strong
W.R. Berkley Corporation
), with Earnings ESP of +2.41% and a Zacks Rank #1.
), with Earnings ESP of +1.24% and a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
BERKLEY (WR) CP (WRB): Free Stock Analysis
INFOSYS LTD (INFY): Free Stock Analysis Report
ERICSSON LM ADR (ERIC): Free Stock Analysis
ARCH CAP GP LTD (ACGL): Free Stock Analysis
To read this article on Zacks.com click here.