Is AT&T (T) Poised to Beat on Earnings? - Analyst Blog
April 16 2014 - 9:50AM
Zacks
AT&T Inc. (T)
is slated to report its fourth-quarter 2013 results on Apr 22,
after the market closes. In the last quarter, the company delivered
a 6.00% earnings surprise. Let’s see how things are shaping up
prior to this announcement.
Why a Likely Positive
Surprise?
Our proven model shows that
AT&T is likely to beat earnings because it has the right
combination of two key ingredients.
Zacks ESP:
Earnings ESP which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, stands at
+4.35% for AT&T. This is a meaningful and leading indicator of
a likely positive earnings surprise.
Zacks Rank:
AT&T currently has a Zacks Rank #2 (Buy). Note that stocks with
Zacks Ranks of #1 (Strong Buy), 2 or 3 (Hold) have a significantly
higher chance of beating earnings.
The combination of AT&T’s Zacks
Rank #2 and +4.35% ESP makes us confident of an earnings beat this
release.
What is Driving the
Better-Than-Expected Earnings?
We expect the company to experience
strong momentum in both wireline and wireless businesses.
Unprecedented demand for smartphones and tablets is fueling
wireless business growth. To support this demand, AT&T is
deploying its LTE network well ahead of its schedule and offers the
best Internet speeds in the U.S. The company’s Wireline segment is
leveraging from continued growth in its U-verse and strategic
services.
Further, AT&T remains a leader
in Wi-Fi (wireless broadband) connectivity, which will be accretive
to its growth. We also remain encouraged by AT&T‘s acquisition
of Leap Wireless, which will boost its prepaid division. However,
spectrum crunch and continued loss of access lines pose major
impediments to the company’s growth story.
Other Stocks to
Consider
Here are some other companies to
consider as our model shows that these have the right combination
of elements to post an earnings beat this quarter:
Level 3 Communication
Inc. (LVLT) with earnings ESP of +17.86% and Zacks Rank
#1.
BCE Inc. (BCE)
with earnings ESP of +1.49% and Zacks Rank #2.
Verizon Communications
Inc. (VZ) with earnings ESP of +3.53% and Zacks Rank
#3.
BCE INC (BCE): Free Stock Analysis Report
LEVEL 3 COMM (LVLT): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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