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Telefonica Brasil (VIV) Q4 Earnings: Can it Pull a Surprise?

Brazilian telecom carrier Telefonica Brasil SAVIV - a subsidiary of Spanish telecom giant Telefonica SA TEF - is scheduled to report fourth-quarter 2016 results on Feb 23, before market open.

Over the past three months, shares of Telefonica Brasil witnessed growth of 14.95% while the Zacks categorized Diversified Communication Services industry gained 5.18%.

Last quarter, the company posted a negative earnings surprise of 26.09%. Moreover, the company's earnings lagged the Zacks Consensus Estimate in two of the previous four quarters, with an average miss of 9.46%.

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

Factors Likely to Influence this Quarter

Telefonica Brasil continues to rule the Brazilian wireless market following the establishment of Vivo as a commercial brand for all services. The company's increased investments in technology upgrades and broadband network infrastructure has helped it to sustain in a competitive and rapidly changing market. The company also continues to fortify its leadership in both data and post-paid segments through various attractive postpaid and prepaid data plans and intends to launch more such schemes going forward. Such efforts are drawing customers, thereby leading to subscriber growth and higher data usage.

On the flip side, the company continues to face numerous hurdles in its fixed line voice business and wireless business. Telefonica Brasil's fixed line voice business is facing intensifying competition from alternative service offerings like wireless telephony, VoIP (voice over Internet Protocol) and cable services (voice, video and broadband). Customers in the wireless segment are opting for the discounted calling rates offered by national wireless operators. The combined company operates in a highly regulated industry and is subject to changes in regulatory measures.

Earnings Whispers

Our proven model does not conclusively show that Telefonica Brasil 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: Telefonica Brasil has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 19 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Telefonica Brasil 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 Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Telefonica Brasil S.A. Price and EPS Surprise

Telefonica Brasil S.A. Price and EPS Surprise | Telefonica Brasil S.A. Quote

Stocks to Consider

Here are some companies in the Zacks-categorized broader 'Utilities' sector that has the right combination of elements to post an earnings beat this quarter.

Pinnacle West Capital Corporation PNW is expected to release fourth-quarter 2016 results on Feb 24, 2017. The company has an Earnings ESP of +2.04% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

However, the company's earnings lagged the Zacks Consensus Estimate in three of the previous four quarters, with an average miss of 9.99%.

Spark Energy, Inc. SPKE is expected to release fourth-quarter 2016 results on Mar 9, 2017. The company has an Earnings ESP of +14.43% and a Zacks Rank #1. However, the company's earnings lagged the Zacks Consensus Estimate in two of the previous four quarters, with an average miss of 41.21%.

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Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report

Telefonica SA (TEF): Free Stock Analysis Report

Telefonica Brasil S.A. (VIV): Free Stock Analysis Report

Spark Energy, Inc. (SPKE): 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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