Will Rogers Communications (RCI) Disappoint This Earnings Season? - Analyst Blog

Rogers Communications Inc. RCI is set to release first-quarter 2014 financial results after the closing bell on April 21, 2014.

In the last quarter, the company delivered an 11.80% negative earnings surprise. Let's see how things are shaping up for this announcement.

Factors to Influence This Quarter

We expect significant expansion of LTE networks, growing demand for mobile data, increased smartphone activations and continuous acquisitions to boost Rogers' financial results in the coming quarters.

However, stiff competition from local carriers and a highly leveraged balance sheet may act as headwinds for the company going forward. Rogers' Wireless segment performed disappointingly in certain operating metrics in the fourth quarter of 2013. In the Wireless segment, Network and Equipment sales for the reported quarter were down 2% and 13%, respectively.

Rogers' cable operations are currently facing increased competition. BCE Inc.'s entry into cable TV services is intensifying competition and may likely slash Rogers' market share and cap margin expansion. BCE Inc. is aggressively rolling out IPTV network and is offering attractively priced triple-play services, which are quite popular particularly among the low-end market segment.

Earnings Whispers

Our proven model does not conclusively show that Rogers Communications 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, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zero Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 64 cents. This leads to an Earnings ESP of 0.00% for Rogers Communications.

Zacks Rank #4 (Sell): Rogers Communications' Zacks Rank #4. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

We caution investors against the stock going into the earnings announcement, as the combination of an Earnings ESP of 0.00% with a Zacks Rank #4 lowers the possibility of an earnings surprise.

Other Stocks to Consider

Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Dish Network Corp. DISH with Earnings ESP of +4.70% and a Zacks Rank #3 (Hold).

Time Warner Cable Inc. TWC with Earnings ESP of +0.60% and a Zacks Rank #3.

TiVo Inc. TIVO with Earnings ESP of +33.33% and a Zacks Rank #3.