Will Windstream's (WIN) Earnings Miss the Mark in Q3? - Analyst Blog

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Windstream Holdings, Inc. ( WIN ) - one of the largest U.S. rural local exchange carriers (RLEC) - is slated to release its third-quarter 2014 results on Nov 6, before the opening bell.

Last quarter, the company's earnings had missed the Zacks Consensus Estimate by a margin of 62.50%. Let's see how things are shaping up for this announcement.

Factors Likely to Influence This Quarter

Windstream is poised for long-term growth buoyed by its investments in fiber-to-the tower and broadband networks coupled with proper cost management. Going ahead, we expect the company to deliver solid results in its enterprise segment by offering robust solutions and a customized approach.

Further, enhancement of its long haul network, expansion of data centers coupled with the recent Kinetic advanced TV service will drive subscriber growth and also improve overall business performance at the company, thereby lending it a competitive edge over its peers.

On the flip side, wireless competition has resulted in a reduction in the company's access lines, lower switched access rates and fewer minutes of usage. Additionally, threats from a competitive market, soft carrier transport business situation, losses in the wholesale business and a highly leveraged balance sheet raise concerns about the company's future.

Earnings Whispers?

Our proven model does not conclusively show that Windstream 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, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP : Windstream has an earnings ESP of -25.00%. This is because the Most Accurate estimate stands at 3 cents while the Zacks Consensus Estimate is pegged higher at 4 cents.

Zacks Rank : Windstream has 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 to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

BlackBerry Ltd. ( BBRY ) has an earnings ESP of +83.33% and carries a Zacks Rank #2 (Buy).

Lumos Networks Corp. ( LMOS ) has an earnings ESP of +15.39% and a Zacks Rank #2.

DragonWave Inc. ( DRWI ) has an earnings ESP of +16.67% and a Zacks Rank #3 (Hold).

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LUMOS NETWORKS (LMOS): 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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