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Will Frontier Communications (FTR) Disappoint Earnings? - Analyst Blog

Frontier Communications CorporationFTR is slated to release its first-quarter 2015 results on May 5, after market close.

In the last reported quarter, Frontier Communications had delivered a 20.00% negative earnings surprise. Meanwhile, the trailing four-quarter average earnings surprise stands at a negative of 2.92%. Let's see how things are shaping up ahead of this announcement.

Factors Likely to Influence this Quarter

We believe new product introductions, improved sales and marketing initiatives, broadband expansion and effective cash flow management through operating expense reduction should drive the company's revenues higher in the coming quarter. Additionally, changes in the channel distribution structure and Frontier's relentless focus on infrastructural development, enhancement of network speed and shareholders' return bode well for long-term growth.

On the flip side, deteriorating backhaul revenue, integration costs as well as higher financial leverage will continue to weigh on the company's earnings.

Earnings Whispers

Our proven model does not conclusively show that Frontier Communications 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 : Frontier Communications has an earnings ESP of -20.00%. This is because the Most Accurate estimate stands at 4 cents while the Zacks Consensus Estimate is pegged higher at 5 cents.

Zacks Rank : Frontier Communications' Zacks Rank #3 increases the predictive power of ESP. Nevertheless, we need to have a positive ESP to be confident of an earnings surprise.

Note that we caution against stocks with Zacks Rank #4 or 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 to consider instead as our model shows these have the right combination of elements to post an earnings beat this quarter:

Intuit Inc. INTU , with an earnings ESP of +2.34% and a Zacks Rank #2.

Cincinnati Bell Inc. CBB , with an earnings ESP of +80.00% and a Zacks Rank #3.

Cogent Communications Holdings, Inc. CCOI , with an earnings ESP of +33.33% and a Zacks Rank #3.

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CINCINNATI BELL (CBB): Free Stock Analysis Report

FRONTIER COMMUN (FTR): Free Stock Analysis Report

INTUIT INC (INTU): Free Stock Analysis Report

COGENT COMM HLD (CCOI): 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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