Telecom Stocks' Earnings On Nov 1: SBAC, HRS, VIAV, WSTC

The Q3 earning season so far has seen better earnings and revenue growth than in the past few quarters. Notably, a larger number of companies are beating Street estimates, with the Finance sector leading the way. Given the rosy earnings picture, this earnings season is on track to be the first quarter to record positive earnings growth after five quarters of back-to-back declines. As per our latest Earnings Preview, aggregate Q3 earnings are now expected to be up 2% from the same period last year on the back of 1.4% higher revenues. Moreover, we expect the trend to continue in the upcoming quarters.

While the initial fears of continued ‘earnings recession’ gradually dissipating, let us take a look at some of the stocks in the telecom sector that are due to report their quarterly numbers on Nov 1.

SBA Communications Corp. (NASDAQ:SBAC) is a leading independent owner and operator of wireless communications infrastructure in the U.S. The stock, scheduled to report its third-quarter 2016 results, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has an Earnings ESP of +60.00% as the Most Accurate estimate of 16 cents is higher than the Zacks Consensus Estimate of 10 cents. According to our proven model, a company needs the right combination of two key ingredients – a positive earnings ESP and a Zacks Rank #3 or better – to increase the odds of an earnings surprise. Thus, SBA Communications is likely to beat the Zacks Consensus Estimate this quarter.

Harris Corporation (NYSE:HRS) is an international company focused on communications equipment for voice, data and video applications. Slated to release first-quarter fiscal 2017 results, Harris has a combination of a Zacks Rank #3 and an earnings ESP of -2.66%. This is because the Most Accurate estimate currently stands at $1.29 while the Zacks Consensus Estimate is pegged at $1.35. Though the company’s Zacks Rank #3 increases the predictive power of ESP, its negative ESP makes surprise prediction difficult (read more: Harris to Report Q1 Earnings: Is a Surprise in Store?)

Viavi Solutions Inc. (NASDAQ:VIAV) provides software and hardware platforms and instruments to telecommunications service providers. The company will be posting its third-quarter 2016 results. This Zacks Rank #4 (Sell) stock has an earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 5 cents. Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement.

West Corporation (NASDAQ:WSTC) provides communication services. The company, scheduled to report third-quarter 2016 results, has a Zacks Rank #4 and an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 71 cents. As stated earlier, we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement.

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