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Can BCE (BCE) Keep Earnings Streak Alive in Q1?

We expect Canada’s leading communication service provider – BCE Inc. BCE – to beat expectations when it reports first-quarter 2016 numbers on Apr 28, before market opens.

Last quarter, BCE posted a 3.92% positive earnings surprise. In fact, the company’s earnings surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 7.94%.

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

Why a Likely Positive Surprise?

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

Zacks ESP: Earnings ESP for BCE stands at +1.54% because the Most Accurate estimate is 66 cents while the Zacks Consensus Estimate is pegged at 65 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.  

Zacks Rank: BCE currently has a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of BCE’s Zacks Rank #2 and +1.54% ESP makes us reasonably confident of an earnings beat.

What's Driving the Better-than-Expected Earnings?

Launch of a new portfolio of products and support services to make mobile communications more handy for customers bodes well and is likely to boost the company’s bottom and top-line performance.

Moreover, the partnership with IBM to expand cloud computing services via Bell Business Cloud and a 5% dividend hike should bolster the company’s performance in the to-be-reported quarter.

Successful launch of Gigabit Fibe coupled with efforts to enhance broadband fiber and 4G LTE mobile networks should help the company gain customers and also put a check on churn. Additionally, Bell Canada’s launch of 4K Whole Home PVR, the most advanced 4K PVR available at present, for all Fibe TV customers in Toronto, Montreal, Ottawa and Quebec should result in an increase in Fibe TV customer count.

However, a decline in Network Access Services lines, stiff competition and union issues are certain factors that might hamper the quarter’s performance.

Other Stocks to Consider

BCE is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:

Sprint Corp. S has an earnings ESP of +69.23% and a Zacks Rank #3.

Cogent Communications Holdings, Inc. CCOI has an earnings ESP of +25.00% and a Zacks Rank #3.

Mattersight Corp. MATR has an earnings ESP of +6.67% and a Zacks Rank #3.

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 >>


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
 
COGENT COMM HLD (CCOI): Free Stock Analysis Report
 
MATTERSIGHT CP (MATR): Free Stock Analysis Report
 
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