Ericsson ( ERIC ) is set to report third-quarter fiscal 2014 results on Oct 24. Last quarter, the company reported a positive surprise of 14.3%. Let us see how things are shaping up for this announcement.
Factors at Play
Higher demand for 4G/LTE networks and mobile broadband services are impelling telecom companies to either upgrade or establish an advanced broadband portfolio to meet customer demand. Therefore, many of the telecom giants have inked contracts with Ericsson for this purpose. This situation has thereby led to a surge in demand for Ericsson's popular LTE technology.
Further, the company has been focusing on enhancing its presence in the TV and media segment through strategic acquisitions.
Our proven model does not conclusively show that Ericsson is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to beat earnings estimate. That is not the case here as you will see below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. The company's ESP stands at +23.5 as the Most Accurate estimate is 21 cents, while the Zacks Consensus Estimate is pegged at 17 cents.
Zacks Rank : Ericsson carries a Zacks Rank #4 (Sell). We caution against stocks with 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 that investors may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Century Aluminum Co. ( CENX ) with an earnings ESP of +11.77% and Zacks #1 Rank (Strong Buy).
Nordson Corp. ( NDSN ) with an earnings ESP of +0.88% and a Zacks Rank #2 (Buy).
Caterpillar Inc. ( CAT ) with an earnings ESP of +2.26% and a Zacks Rank #3 (Hold).