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What Awaits Rogers Communications (RCI) in Q1 Earnings?

Rogers Communications Inc. RCI is slated to report its first-quarter 2016 numbers after market closes on Apr 18.

Last quarter, Rogers had delivered a negative earnings surprise of 8%. Moreover, the company has managed to beat the Zacks Consensus Estimate only once in the past four quarters, with an average miss of 4.90%. Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

Rogers Communications signed a five-year deal with the Major League Baseball Advanced Media (MLBAM) to come up with an app that will allow easy and seamless access to games, highlights, news and stats on demand. Such features are also made available to the Rogers NHL GameCentre LIVE™ app for hockey fans. We believe such additions will be able to entice baseball and hockey fans, while providing Rogers a source of substantial subscription-based revenues, going ahead.

As per recent data given by the Commissioner for Complaints for Telecommunications Services (CCTS), customer-related complaints against Rogers Communications have dropped a substantial 65%. This was largely due to the company’s efforts on improving customer experience. Going forward, improvements in service to ensure further reduction of such complaints should help the company attract subscribers and increase its ARPU (Average Revenue Per Unit).

Nevertheless, Rogers’ Cable operations are currently facing stiff competition from rivals such as Shaw Communications Inc. SJR and BCE Inc. BCE. Not unlike other cable companies, Rogers, too, has been losing viewers to video streaming service providers like Netflix. In fact, in recent times, viewership of traditional cable TV players has been suffering due to the popularity of on-demand video delivered online.

Earnings Whispers

Our proven model does not conclusively show that Rogers Communications is likely to beat earnings 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: Rogers Communications has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 40 cents.

Zacks Rank: Rogers Communications has a Zacks Rank #2, which increases the predictive power of ESP. However, we need a positive ESP to be confident of an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
A Stock to Consider

Here is a company you may want to consider instead, as our model shows it has the right combination of elements to post an earnings beat this quarter:

Sprint Corp. S with an Earnings ESP of +38.46% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SPRINT CORP (S): Free Stock Analysis Report
BCE INC (BCE): Free Stock Analysis Report
SHAW COMMS-CL B (SJR): Free Stock Analysis Report
ROGERS COMM CLB (RCI): Free Stock Analysis Report
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