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Can Motorola Solutions (MSI) Q3 Earnings Pull a Surprise?

Motorola Solutions Inc.MSI is set to release third-quarter 2015 results before the opening bell on Nov 4.

In the last quarter, the company posted a 29.17% earnings surprise. Let's see how things are shaping up for this announcement.

Factors at Play

Motorola Solutions is continuously investing in its public safety LTE portfolio of Android devices like TC55, LEX 700 and LEX L10, which is a positive. Moreover, a significant number of contract wins coupled with the government's decision to deploy a nationwide wireless network for public safety may generate considerable revenues for the company.

However, Motorola Solutions is heavily dependent on government contracts for revenue generation as 70% of its total sales come from government agencies. Thus, reduction in government expenditure and macroeconomic fluctuations are likely to affect sales significantly.

Moreover, Sprint Corp.'s decision to gradually phase out iDEN network has been a major setback.

Earnings Whispers

Our proven model does not conclusively show that Motorola Solutions is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are both poised at 65 cents. Hence, the ESP for Motorola Solutions is 0.00%.

Zacks Rank: Motorola Solutions carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

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

CenturyLink, Inc. CTL with an earnings ESP of +1.45% and a Zacks Rank #2.

Cogent Communications Holdings, Inc. CCOI with an earnings ESP of +16.67% and a Zacks Rank #3.

Windstream Holdings, Inc. WIN with a Zacks Rank #2 and an earnings ESP of +7.5%.

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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

CENTURYLINK INC (CTL): Free Stock Analysis Report

WINDSTREAM HLDG (WIN): Free Stock Analysis Report

MOTOROLA SOLUTN (MSI): Free Stock Analysis Report

COGENT COMM HLD (CCOI): 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 Nasdaq, Inc.


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

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