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Will AT&T (T) Beat Q1 Earnings on Healthy Organic Growth?

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AT&T Inc. T is scheduled to report first-quarter 2018 results after the closing bell on Apr 25. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 13 cents. Over the trailing four quarters, it delivered a positive average earnings surprise of 6.4%, beating estimates twice.

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

Factors to Consider

AT&T is gearing up to launch the first standards-based mobile 5G services to consumers in multiple U.S. markets by the end of 2018. The company has been working hard since 2017 to lay the foundation for mobile 5G network and has completed network upgradation in 23 major cities.

In August 2017, AT&T deployed 5G technology trials in three new cities — Waco, TX; Kalamazoo, MI and South Bend, IN. In December 2017, the company initiated its largest 5G fixed wireless trial in Waco, partnering with the home and lifestyle brand, Magnolia. The company claims it to be the largest trial in terms of mobile traffic. Notably, completion of 3rd Generation Partnership Project’s first implementable 5G New radio (NR) specification has set the stage for the global mobile industry to start full-scale development of 5G NR for large-scale trials and commercial deployments in 2019.

AT&T is also mulling to deploy Open Reconfigurable Optical Add/Drop Multiplexer (ROADM) and optical SDN initiatives to its live network. The deployment will be done using multiple vendors and an optical SDN controller integrated into AT&T’s Enhanced Control, Orchestration, Management and Policy virtualization platform, the first of which will be done in Dallas.

The ROADM technology helps to automatically manage and adjust optical bandwidth on high capacity fiber optic lines. AT&T already uses ROADMs and SDN controller for its internal management purposes. Now, the company is planning to apply the same to its live network, enabling customers to detect and modify bandwidth, automatically depending on network congestion in different locations. All these measures are likely to boost the company’s revenues in the quarter.

Earnings Whispers

Our proven model conclusively shows that AT&T is likely to beat earnings this quarter as it possesses the key components. 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. This is perfectly the case here as you will see below:

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.93% as the former is pegged at 89 cents and the latter at 87 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AT&T Inc. Price and EPS Surprise


AT&T Inc. Price and EPS Surprise | AT&T Inc. Quote

Zacks Rank: AT&T has a Zacks Rank #3. This increases the predictive power of ESP and makes us reasonably confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other 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:

Capital One Financial Corporation COF has an Earnings ESP of +0.79% and carries a Zacks Rank #3. The company is slated to release results on Apr 24.

BOK Financial Corporation BOKF is slated to report first-quarter 2018 results on Apr 25. It has an Earnings ESP of +0.24% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

New York Community Bancorp NYCB is slated to release results on Apr 25. It has an Earnings ESP of +0.14% and carries a Zacks Rank #3.

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