Alcatel Lucent Inc
) is set to report second quarter 2013 results on July 31. Last
quarter it posted an 81.8% negative surprise. Let's see how
things are shaping up for this announcement.
Factors this Past Quarter
The company's first-quarter results were not encouraging, as
overall revenues dropped due to declines across its segments. In
addition, gross margin was impacted by weakness of the U.S.
dollar and an adverse impact from product and geographic mix.
Further, even after changing its chief executive officer
twice, the company has failed to revive its earnings growth. In
addition, Alcatel-Lucent has a credit rating of B3 from Moody's
Investors Service and B- at Standard and Poor's; both being six
steps below investment grade ratings.
Our proven model does not conclusively show that Alcatel
Lucent is likely to beat earnings this quarter. That is because a
stock needs to have both a positive Earnings ESP and a Zacks Rank
of #1, 2 or 3 for this to happen. That is not the case here as
you will see below.
Negative Zacks ESP:
Read: Zacks Earnings ESP: A Better Method
): That is because the Most Accurate estimate stands at
-$0.13, while the Zacks Consensus Estimate is -$0.12. That is a
difference of -8.3%.
Zacks #3 Rank (Hold):
Alcatel Lucent's Zacks Rank #5 (Strong Sell) lowers the
predictive power of ESP because the Zacks Rank #5 when combined
with a negative ESP makes surprise prediction difficult. We
caution against stocks with Zacks #4 and #5 Ranks (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:
ALCATEL ADS (ALU): Free Stock Analysis Report
HARMONIC INC (HLIT): Free Stock Analysis
INVENSENSE INC (INVN): Free Stock Analysis
GARTNER INC -A (IT): Free Stock Analysis
To read this article on Zacks.com click here.
), Earnings ESP of 100.0% and Zacks Rank #1 (Strong
), Earnings ESP of 8.3% and Zacks Rank #2 (Buy)
), Earnings ESP of 1.9% and Zacks Rank #2 (Buy)