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Sprint (S): What's in Store for the Stock in Q3 Earnings?

U.S. national wireless carrier Sprint Corp.S ) is slated to report third-quarter fiscal 2016 financial numbers before the opening bell on Jan 31.

Last quarter, the company posted an impressive positive earnings surprise of 42.86%. Moreover, the company's earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 18.35%.

Over the past three months, Sprint marked a growth of 49.13%, beating the Zacks-categorized ' Wireless National ' industry's gain of 10.90%.

Let's see how things are shaping up for this announcement.

Factors at Play

Sprint is on track with its network modernization and integration efforts, which has fortified its position in the wireless industry. We also believe that efficient usage of capital, reduction of cell sites, elimination of dual networks, backhaul efficiencies, reduced churn, lower roaming charges and energy cost savings are some of its major positives.

We are also impressed with Sprint's efforts to lure more customers through different winter promotional offers such as 'Unlimited Freedom' and 'Sprint Open World'. However, attractive promotional plans and lucrative discounts to win customers from rival carriers such as AT&T Inc. T and Verizon Communications Inc. VZ have resulted in high cash burn and heavy losses for Sprint.

Also, while Sprint's decision to skip the Federal Communications Commission's 600 MHz low-band airwaves auction will save cash, it will limit its scope for network upgrades and expansion. Additionally, the company has a debt-laden balance sheet and negative operating cash flow. Moreover, it has been witnessing losses since 2007.

Earnings Whispers

Our proven model does not conclusively show that Sprint 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 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Sprint has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 8 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

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

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

Sprint Corporation Price and EPS Surprise

Sprint Corporation Price and EPS Surprise | Sprint Corporation Quote

A Key Pick

Here is a company that has the right combination of elements to post an earnings beat this quarter.

Seagate Technology plc STX is likely to remain on the earnings beat track. Its earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 3.28%. It currently has an Earnings ESP of +11.49% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

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Seagate Technology PLC (STX): Free Stock Analysis Report

AT&T Inc. (T): Free Stock Analysis Report

Sprint Corporation (S): Free Stock Analysis Report

Verizon Communications Inc. (VZ): 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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