Ericsson (BS:ERICAs) ERIC is scheduled to report first-quarter 2020 results on Apr 22, before the opening bell. In the last reported quarter, the company reported a negative earnings surprise of 6.3%, missing the Zacks Consensus Estimate by a penny.
The Sweden-based telecom gear maker is expected to have recorded higher aggregate revenues on a year-over-year basis, primarily driven by its leadership in 5G technology amid competition. Owing to invest¬ments in R&D combined with operational efficiency, Ericsson has the world’s leading patent portfolio in cellular technology, with more than 54,000 granted patents and above 100 signed licensing agreements.
Let’s discuss the factors that are likely to get reflected in the upcoming quarterly announcement.
Factors at Play
During the quarter under review, Ericsson was selected by Orange France to deploy its 5G radio access network (RAN) in three major French regions, including Paris, and modernize existing 2G/3G/4G RAN. The company was chosen by Telekom Albania as the sole supplier to modernize the service provider’s radio and core networks in a break-in deal spanning five years. These are likely to have made an impact on the company’s first-quarter performance.
The company rolled out 5G RAN and 5G Core for Polish communications service provider Polkomtel, which owns the Plus brand in Poland. Ericsson made its dynamic spectrum sharing solution commercially available, allowing communications service providers to quickly and cost-effectively launch 5G on a nationwide scale. It was selected by the communications service provider from Japan — NTT DOCOMO — as its AI-based optimization solution vendor for its nationwide RAN.
Ericsson and Telenor switched on Norway’s first commercial 5G services in the city of Trondheim. Ericsson’s managed services partnership with Omani communication services provider Omantel was renewed and expanded for a further five years. Chunghwa Telecom selected Ericsson for rapid 5G build-out in Taiwan. The company’s performance is expected to have benefited from these positives.
Ericsson and SmarTone, one of the leading communications service providers in Hong Kong, agreed to a five-year contract for the deployment of 5G. Teracom AB, a state-owned service provider in Sweden, selected Ericsson to be the strategic partner of their nationwide 4G network. Ericsson was selected by Greece’s largest mobile communications service provider COSMOTE as its sole 5G RAN vendor under a major network modernization deal.
MTN Benin extended its managed services partnership with Ericsson to introduce network managed services provision with a focus on AI, automation and analytics. MTS, Russia’s largest communications service provider, extended its long-standing partnership with Ericsson to include a large-scale network modernization of its 2G/3G/4G infrastructure over large parts of central Russia.
As of Mar 31, Ericsson had 86 commercial 5G agreements and 27 live networks in four continents. For the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $5,545 million that indicates a rise of 4% from the year-ago quarter’s reported figure. Adjusted earnings per share are pegged at 7 cents, which calls for a decline of 22.2% from the prior-year quarter’s recorded figure.
What Our Model Says
Our proven model doesn’t conclusively predict an earnings beat for Ericsson this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Ericsson’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 7 cents.
Ericsson Price and EPS Surprise
Zacks Rank: Ericsson currently has a Zacks Rank #3.
Stocks to Consider
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Ardagh Group S.A. ARD is slated to release quarterly results on Apr 23. It has an Earnings ESP of +8.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eli Lilly and Company (NYSE:LLY) LLY is scheduled to release results on Apr 23. The company has an Earnings ESP of +1.67% and carries a Zacks Rank #2.
Citrix Systems (NASDAQ:CTXS), Inc. CTXS has an Earnings ESP of +1.58% and carries a Zacks Rank of 2. The company is set to report results on Apr 23.
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