Leading U.S. wireless carrier Verizon Communications Inc.VZ is set to release its second-quarter 2015 financial numbers before the opening bell on Jul 21, 2015.
Why a Likely Positive Surprise?
Our proven model shows that Verizon is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP : Earnings ESP for this company stands at +1.0% as the Most Accurate estimate is $1.01 while the Zacks Consensus Estimate is pegged at $1.0. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Verizon currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a significantly higher chance of beating earnings estimates. Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
The combination of Verizon's Zacks Rank #3 and +1.0% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Consistent market share gain, strong LTE (Long Term Evolution) sales and the rollout of FiOS Internet have been key contributors to growth. Further, robust addition of tablets and Wi-Fi devices are increasing the number of gadgets per customer, which has also contributed to revenues in the second quarter.
Verizon enjoys a strong foothold in the wireless market and looks to grow from higher penetration of devices and increased market traction of 4G LTE services.
Last month, Verizon took over AOL for $4.4 billion. The AOL acquisition will not only expand Verizon's mobile-video platform but will also provide customers an access to its state-of-the-art advertising technology which enables automated buying and selling of ads online. At present, AOL is developing an innovative automated technology that will enable advertisers to find video publishers who will help them reach out to the targeted audience. However, we believe that the acquisition might affect Verizon's cash position. At the end of first-quarter 2015, Verizon had $4,933 million of cash and short-term investments in comparison with $11,153 million of cash and short-term investments at the end of 2013.
Other Stocks to Consider
Here are other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:
CACI International Inc. CACI has an earnings ESP of +1.77% and a Zacks Rank #3.
AT&T, Inc. T has an earnings ESP of +1.59% and a Zacks Rank #3.
Telecom Argentina S.A. TEO has an earnings ESP of +1.96% and a Zacks Rank #3.