Markets
CTL

What's Ahead for Cincinnati Bell (CBB) in Q4 Earnings?

Telecom service provider Cincinnati Bell Inc.CBB is slated to report fourth-quarter 2016 results on Feb 15, before the opening bell.

The fourth-quarter 2016 financial report will be based on the company's different business activities, financial operations and other operations during the October-December period of 2016. Over these three months span, shares of Cincinnati Bell witnessed growth of 9.56% while the Zacks categorized Diversified Comm Services industry witnessed a decline of 7.21%.

Last quarter, the company's bottom line matched the Zacks Consensus Estimate. However, the company's earnings lagged the Zacks Consensus Estimate in two of the previous four quarters, the average miss being 29.17%.

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

Factors at Play

We are impressed with Cincinnati Bell's continuous efforts to transform itself from a legacy copper-based telecommunications company to an IT company with contemporary fiber assets offering flexible data, video, voice and IP solutions to both consumer and business customers.

In the Entertainment and Communications business, the company's investments in Fioptics products have helped it to witness revenue growth and subscriber addition. In this regard, the introduction of MyTV through its Fioptics high-speed Internet service bodes well. Additionally, increased investments in strategic products, the creation of a new business division for small and mid-sized businesses and the development of its IT Services and Hardware division have raked in more profits.

We also appreciate Cincinnati Bell's recent decision to start offering eero inc's whole-home Wi-Fi system at eight of its retail stores across Greater Cincinnati. This has helped in expanding its FTTH (Fiber to the home) customer base. Also, the company's decision to expand its call centre base by hiring 300 more employees at its universal call centers has added to the region's economic development.

On the flip side, continuous erosion in local access lines, heavy capital expenditure requirements, legal hurdles and a weakening cash and liquidity position of the company are potent headwinds. Moreover, intensifying competition in the company's operational region can prove to be a drag on its pricing power, thereby inducing pressure on margins.

Also, the company recently faced opposition to its Local Area Service (LAS) discontinuation within the Kentucky region, from consumers and industry groups, citing concerns over the eventual shutdown of POTS services. CenturyLink Inc. CTL and Windstream Holdings, Inc. WIN also faced similar issues from consumers and businesses regarding their requests to shut down Frame Relay and small to medium-sized business digital subscriber line services.

Earnings Whispers

Our proven model does not conclusively show that Cincinnati Bell 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, this is not the case here as elaborated below.

Zacks ESP: Cincinnati Bell has an Earnings ESP of -100.00%. This is because the Most Accurate estimate stands at a break-even while the Zacks Consensus Estimate is pegged at 3 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

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

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

Cincinnati Bell Inc Price and EPS Surprise

Cincinnati Bell Inc Price and EPS Surprise | Cincinnati Bell Inc Quote

Stock to Consider

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

SCANA Corporation SCG is expected to release fourth-quarter 2016 results around Feb 16, 2017. The company has an Earnings ESP of +3.23% and a Zacks Rank #2.You can see the complete list of today's Zacks #1 Rank stocks here .

The company's earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 6.74%.

Zacks' Top 10 Stocks for 2017

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?

Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>

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

Scana Corporation (SCG): Free Stock Analysis Report

Cincinnati Bell Inc (CBB): Free Stock Analysis Report

CenturyLink, Inc. (CTL): Free Stock Analysis Report

Windstream Holdings, Inc. (WIN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

CTL CBB

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More