Is ADTRAN (ADTN) Poised to Beat Earnings Estimates? - Analyst Blog

Communication network solution provider, ADTRAN Inc. ADTN, is set to release its first-quarter 2014 results before the opening bell on April 16, 2014.

Why a Likely Positive Surprise?

Our proven model shows that ADTRAN is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +6.25%. The Zacks Consensus Estimate is poised at 16 cents whereas the Most Accurate estimate is 17 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.  

Zacks Rank: ADTRAN currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings.  

The combination of ADTRAN's Zacks Rank #3 and +6.25% ESP makes us confident of positive earnings beat this release.

What is Driving the Better-Than-Expected Earnings?

We expect an impressive performance from ADTRAN as the company continues to perform well owing to strong contributions from the U.S., Europe, the Middle East and Africa, and Latin American regions. ADTRAN has stabilized its businesses with Tier 1 carriers and has also secured contracts from Tier 2 and 3 carriers.

We expect the company to benefit from market share gain, strong growth of core products, solid international sales and growing service revenues. Notably, the company has reported positive earnings surprise in the last four quarters.

ADTRAN has also registered significant growth in its professional service activities that deploy the Total Access System components in telecommunication companies. Also, the company expects professional services capabilities to remain in demand as both domestic and international carriers seek cost-effective methods to accelerate network deployment.

Other Stocks to Consider

Other companies you may want to consider on the basis of our model which shows that these have the right combination of elements to post an earnings beat this quarter include:

TiVo Inc. TIVO with earnings ESP of +33.33% and Zacks Rank #3 (Hold).

Starz STRZA with earnings ESP of +3.77% and Zacks Rank #2 (Buy).

America Movil S.A.B. de C.V. AMX with earnings ESP of +9.76% and Zacks Rank #3 (Hold).