Will LEAP Wireless (LEAP) Beat Earnings? - Analyst Blog

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We expect U.S. prepaid carrier, LEAP Wireless International Inc. ( LEAP ), to beat expectations when it reports second-quarter 2013 results on Aug 1, 2013, after the market closes.

Why a Likely Positive Surprise?

Our proven model shows that LEAP is likely to beat earnings because it has the right combination of two key ingredients.


Positive Zacks ESP : Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method ), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +6.06%. This is very meaningful and a leading indicator of a likely positive earnings surprise.

Zacks #3 Rank (Hold) : LEAP currently has a Zacks Rank #3. Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings. 

The combination of LEAP's Zacks Rank #3 (Hold) and +6.06% ESP makes us very confident of a positive earnings beat on Aug 1, 2013.

What is Driving the Better-Than-Expected Earnings?

LEAP restructured its business model to stress on higher ARPU generating smartphone subscribers, while eliminating the less profitable wireless broadband subscribers. The company plans to expand coverage in urban and suburban markets while avoiding less populated areas to keep its infrastructural cost low, thus, improving margins.

Additionally, LEAP has decided to launch an array of attractive service plans coupled with various LTE based smartphones, which are expected to boost subscriber growth. However, continuous loss of subscribers coupled with significant increase in promotional activities may affect profitability.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that they have the right combination of elements to post an earnings beat this quarter are as follows:

CBS Corporation ( CBS ) currently has Earnings ESP of +1.39% and holds a Zacks Rank #2 (Buy).

Cablevision Systems Corp. ( CVC ) has Earnings ESP of +40.00% and carries a Zacks Rank #3 (Hold).

American Tower Corp. ( AMT ) has Earnings ESP of +3.77% and carries a Zacks Rank #3 (Hold).



AMER TOWER CORP (AMT): Free Stock Analysis Report

CBS CORP (CBS): Free Stock Analysis Report

CABLEVISION SYS (CVC): Free Stock Analysis Report

LEAP WIRELESS (LEAP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AMT , CBS , CVC , LEAP

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