Can Cincinnati Bell's (CBB) Q1 Earnings Pull A Surprise?

Cincinnati Bell Inc. ( (NYSE:CBB) is slated to release first-quarter 2016 results on May 5, before the opening bell.

Last quarter, Cincinnati Bell’s earnings had met the Zacks Consensus Estimate. Meanwhile, the trailing four-quarter average earnings surprise stands at 66.67%.

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

Factors Likely to Influence this Quarter

Introduction of MyTV through its Fioptics high-speed Internet service bodes well as providing smaller, tailored TV channel packages are likely to drive the company’s top line as well as check churn in the quarter. Moreover, creation of a new business division aimed at providing support services to various small and mid-sized Businesses (SMBs) should further boost the quarter’s performance.

On the flip side, continuous erosion in local access lines, heavy capital expenditure requirements, slower pace of ARPU growth along with legal hurdles are some of the factors that might hamper the quarter’s results. Moreover, intensifying competition in the company’s operational region can be a drag on its pricing power, thereby inducing pressure on its margins.

Earnings Whispers

Our proven model does not conclusively show that Cincinnati Bell 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: Cincinnati Bell has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 3 cents.

Zacks Rank: Cincinnati Bell has a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

On the other hand, 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 negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

TELUS Corporation (NYSE:TU) has an earnings ESP of +4.00% and a Zacks Rank #2.

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

Mattersight Corporation (NASDAQ:MATR) has an earnings ESP of +6.67% and a Zacks Rank #3.

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