Telecom Stocks Q4 Earnings to Watch on Jan 24: VZ & GLW
Zacks Equity Research
Updated
The fourth-quarter earnings season is well underway with 63 S&P 500 participants (accounting for 19.2% of the index’s total market capitalization) having reported results as of Friday, Jan 20, according to the latest Earnings Preview. Total earnings for these 63 index members are up 4.7% year over year, on 2.7% higher revenues, with 66.7% beating EPS estimates and 50.8% coming ahead of top-line expectations.
The season has started on a strong note, courtesy of earnings beats from big names in the banking space like JPMorgan Chase & Co. JPM and Bank of America (BAC). This week will see more than 300 companies coming up with quarterly results, including 105 S&P 500 members.
On the whole, we anticipate the pace of growth to improve steadily this earnings season. In fact, our latest data projects that earnings for the S&P 500 companies are now on track to grow 4.8% from the year-ago period on 3.7% higher revenues. This is comparable to earnings growth of 3.8% in Q3, which was the first quarter of growth after five consecutive quarters of earnings contraction, on 2.3% higher revenues.
What’s Ahead for the ‘Computer and Technology’ Industry?
The ‘Computer and Technology’ Industry is one of the important sectors of the 16 Zacks sectors that are expected to see earnings growth in the fourth quarter. Earnings of the technology space are on track to be up 3.6% in the quarter on 4.3% higher sales than last year. The telecom space will see heavyweights like Verizon Communications Inc. VZ, AT&T Inc. T, Qualcomm Inc. QCOM, Comcast Corp. CMCSA and Corning Incorporated GLW reporting their numbers this week.
Let’s have a look at how some ‘Computer and Technology’ companies like Verizon Communications and Corning are poised ahead of their fourth-quarter earnings releases before market opens on Jan 24.
Verizon Communications’ plans of diversifying its business model have always been impressive. The telco’s business reaches out to various fields like communications, technology, wireless industry and Internet of Things (IoT). Moreover, it has diversified into the digital ad and content market as well as deployment of high-speed fiber network.
The telco has an impressive earnings surprise history, having surpassed estimates in three of the previous four quarters, with an average beat of 1.06%. In the last reported quarter, the company surpassed earnings estimates by 2.02%.
Verizon Communications Inc. Price and EPS Surprise
Verizon Communications Inc. Price and EPS Surprise | Verizon Communications Inc. Quote
Our proven model does not conclusively show that the company is likely to beat on earnings in the to-be-reported quarter. This is because inspite of carrying a Zacks Rank #3 (Hold),Verizon currently has an Earnings ESP of -1.12%, with the Most Accurate estimate being 88 cents and the Zacks Consensus Estimate pegged at 89 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter (read more : Can Verizon Pull Off a Surprise This Earnings Season?).
Despite a favorable rank, the company’s negative Earnings ESP leaves surprise prediction inconclusive. Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. You can see the complete list of today’s Zacks #1 Rank stocks here.
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.
Corning Inc. manufactures optical fiber, cable and photonic products for the telecommunications industry; and high-performance displays and components for television and other communications-related industries. The company remains focused on expanding its footprint in the automotive market, as evident from the recently unveiled glass-enabled concept car. Additionally, stable end markets such as tablets, mobile etc. might help the company to post an earnings beat in the to-be reported quarter.
Last quarter, Corning reported a positive earnings surprise of 10.53%. Notably, the company delivered positive earnings surprises in three of the previous four quarters, with an average beat of 8.10%.
Corning Inc. Price and EPS Surprise
Corning Inc. Price and EPS Surprise | Corning Inc. Quote
Our proven model does conclusively show that Corning is likely to beat on earnings this quarter. This is because the company currently has an Earnings ESP of +2.27%, with the Most Accurate estimate being 45 cents and the Zacks Consensus Estimate pegged at 44 cents. Strengthening the chance of an earnings beat is the company’s Zacks Rank #2 (read more : Will Corning Beat Estimates this Earnings Season?).
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