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What's in the Offing for BCE Stock This Earnings Season?

Leading Canadian telephone operator BCE Inc BCE is scheduled to report third-quarter 2017 results on Nov 2, before the opening bell.

BCE displays a mixed earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in two of the previous quarters and lagged the same in the remaining two quarters, with an average miss of 0.85%.

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

Factors Likely to Influence This Quarter

BCE continues to struggle with stringent regulatory norms, losses in network access services lines, price competition, labor union issues, operational risks and construction delays. In the wireless segment, BCE competes against the likes of Rogers Communications Inc RCI, TELUS Corporation TU and small regional carriers in Canada.

The company’s wireline segment continues to witness a decline in revenues. In the second quarter of 2017, Wireline product revenues decreased 0.8% to $176.83 million. Wireline data revenues were up 6.7% to $1,335.91 million. Local and access revenues increased 4.1% to $604.06 million due to the financial contribution from Bell MTS and residential rate increases. We expect the company to recover from these losses in the to-be-reported quarter.

The price performance of BCE does not impress. In the past three months, shares of the company have declined 1.2% compared with the industry‘s decline of 7.3%.

 

 

On the flip side, we are impressed with BCE's decision to invest $854 million, which will boost its fiber-optics network suite and generate higher revenues by luring customers. Buyout of Manitoba Telecom Services places BCE's arm, Bell Canada, as one of the largest mobile provider in Manitoba. Bell Canada’s data center and cloud computing operations are also likely to be driven by the integration of MTS’ existing data center in Winnipeg. Buyout of Q9 Networks boosts BCE's cloud suite.  Deployment of Gigabit Fibe, 4G LTE mobile networks, upcoming 5G networks, IP phone services and post-paid businesses should help the company gain customers.

Earnings Whispers

Our proven model does not conclusively show that BCE is likely to beat the Zacks Consensus Estimate 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: BCE has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate stands and the Zacks Consensus Estimate are pegged at 67 cents. You can uncover the best stocks to buy or sell before they’re reported with ourhttps://www.zacks.com/premium/esp-buy?adid=zp_article_espfil..."> Earnings ESP Filter.

Zacks Rank: BCE has a Zacks Rank #4 (Sell).

BCE, Inc. Price and EPS Surprise

 

BCE, Inc. Price and EPS Surprise | BCE, Inc. Quote

 

Notably, 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.

Stocks to Consider

Here are some companies from the broader Utilities sector, which houses BCE, that have the right combination of elements to post an earnings beat this quarter.

TELUS has an Earnings ESP of +4.91% and carries a Zacks Rank #3. You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank stocks here.

The company will release third-quarter 2017 financial results on Nov 9. The company’s earnings surpassed the Zacks Consensus Estimate in one of the previous four quarters.

Shenandoah Telecommunications Co SHEN has an Earnings ESP of +300.00% and carries a Zacks Rank #3. It will release third-quarter financial results on Nov 2. The company’s earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters.

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TELUS Corporation (TU): Free Stock Analysis Report
 
BCE, Inc. (BCE): Free Stock Analysis Report
 
Shenandoah Telecommunications Co (SHEN): Free Stock Analysis Report
 
Rogers Communication, Inc. (RCI): Free Stock Analysis Report
 
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