Wireless Equipment Stocks Earnings: QCOM, PLCM, ZHNE

With 36 S&P 500 members reporting their quarterly numbers (as of July 15), we are getting into the thick of Q2 earnings. Although the growth pace in the quarter seems to have improved, expectations for earnings growth are still negative. This would mean a fifth straight quarter of negative growth, underscoring the fact that we are still in ‘Earnings Recession’.

As per the recent Zacks Trend report, total S&P 500 earnings are expected to decline by 5.4% due to 0.5% lower revenues. Though the growth estimates of Q2 might not be the scraping end of the barrel as even Q3 estimates are leaning into the negative territory, they still raise concerns. However, we foresee positive earnings growth in the last quarter of the year which may scale even higher in 2017.

Focus on Wireless Equipment Industry

The wireless equipment industry currently carries a Zacks Industry Rank of 158 out of more than 250 industries. As per the Zacks Industry Rank guideline, the outlook for this particular industry is neutral. We believe that innovation in telecom technologies will help the equipment manufacturers implement newer business models in order to boost their revenues. However, cut-throat pricing competition may be a strain on margins going forward.

Let us focus on 3 stocks of the wireless equipment segment that are due to release their earnings this week.

QUALCOMM Incorporated (NASDAQ:QCOM) develops and delivers chipsets, digital wireless and communications products. The company is scheduled to report its third-quarter fiscal 2016 financial results on Jul 20, after the closing bell. The company has a Zacks Rank #2 (Buy) and a positive Earnings ESP of 3.61%. This combination, as per our proven model, makes us confident of an earnings beat this quarter. (Read more: Qualcomm Q3 Earnings: What's in the Cards?)

Polycom, Inc. (NASDAQ:PLCM) develops, manufactures and markets a full range of high-quality, media-rich communication tools and network solutions. The company is expected to report its quarterly financial results on Jul 21, 2016. This Zacks Rank #3 (Hold) stock has Earnings ESP of 0.00%, which makes surprise prediction difficult.

Zhone Technologies Inc. (NASDAQ:ZHNE) is a developer of telecommunications infrastructure products for the local access network. This Zacks Rank #3 (Hold) company is scheduled to deliver its quarterly results on Jul 21, 2016. Zhone’s Earnings ESP of 0.00% does not conclusively show an earnings beat this quarter.