Rogers Communications Inc. RCI, the largest integrated telecom operator in Canada, is scheduled to report second-quarter 2017 results on Jul 20, before the market opens.

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

Why a Likely Positive Surprise?

Our proven model shows that Rogers Communications’is likely to beat earnings because it has the perfect combination of the two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.41% for Rogers Communications. This is because the Most Accurate estimate stands at 72 cents, higher than the Zacks Consensus Estimate of 71 cents. A favorable Earnings ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. 

Zacks Rank: Rogers Communications has a Zacks Rank #2 (Buy), which increases the predictive power of the ESP. Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates.

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

The combination of the company’s Zacks Rank #2 and +1.41% ESP makes us reasonably confident of a positive earnings beat on Jul 20.

 

 

Rogers Communication, Inc. Price and EPS Surprise

Rogers Communication, Inc. Price and EPS Surprise | Rogers Communication, Inc. Quote

Reasons for Better-than-Expected Earnings

 

Over the past six months, the price performance of Rogers Communications was impressive. The stock price increased 26.4%, outperforming the Zacks-categorized Cable TV Market’s growth of 7.8% over the same time frame.

Rogers Communications has become the first wireless operator in Canada to offer Internet of Things (“IoT”) as a service to business enterprises. End-to-End Incident Management, Farm & Food Monitoring and Level Monitoring are the three IoT services that the wireless carrier currently offers.

The company expects the Canadian IoT market size to reach a value of $13.5 billion by 2019. Wireless networks will provide the primary impetus to the telecom industry. In this regard, IoT holds the potential to emerge as the numero uno factor for future growth. Thus, Rogers Communications’ increasing traction in this space bodes well.

The company continues to roll out 700 MHz LTE ‘lower block’ spectrum that provides better in-building penetration and rural LTE coverage. Meanwhile, its wireless operations accounted for nearly 58.95% of the company’s total revenue in the first quarter of 2017.