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Will Higher Revenues Drive Ericsson's (ERIC) Earnings in Q2?

Zacks Equity Research
·3-min read

Ericsson ERIC is scheduled to report second-quarter 2021 results on Jul 16, before the opening bell. In the last reported quarter, the company posted a negative earnings surprise of 7.7%. The bottom line missed the Zacks Consensus Estimate by a penny.

This Sweden-based company is expected to have recorded higher aggregate revenues year over year, primarily driven by market share gains in its core Networks business. It continues to cash in on the market momentum with a competitive 5G product portfolio.

Factors at Play

During the quarter, Ericsson increased investments to boost its capabilities and expand footprint by partnering with communications service providers globally. It was selected by Epic, a leading technology company in Malta, as an exclusive 5G radio access network (RAN) provider.

New Zealand-based communications service provider, 2degrees, chose Ericsson as a technology partner across its 5G RAN. Ericsson was selected by O2 Slovakia as its sole 5G RAN technology solutions vendor.

Ericsson and Airbus extended their partnership to increase aircraft production and validation efficiency using Ericsson’s technology. Iceland’s largest communications service provider, Siminn, selected Ericsson as its 5G RAN partner.

Swisscom, a major telecommunications service provider in Switzerland, strengthened its partnership with Ericsson with a deal extension that focuses on 5G deployment.

MASMOVIL Group, a growing telecommunications operator in Spain, extended its 5G partnership with Ericsson. Ericsson’s 5G Standalone technology products and solutions will be used to modernize the Group’s existing network.

Vodafone chose Ericsson’s cloud-native dual-mode 5G Core technology to power its networks in Germany and the U.K. Ericsson was selected by KDDI Corporation and SoftBank as one of the vendors to help deploy Japan’s first multi-operator RAN.

These developments are likely to have had a positive impact on Ericsson’s top line. The company estimates that 5G mobile subscriptions will exceed 580 million by the end of 2021.

For the June quarter, the Zacks Consensus Estimate for revenues is pegged at $6,651 million, which indicates growth of 15.8% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share is pegged at 14 cents, which suggests an increase of 40%.

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 14 cents.

Ericsson Price and EPS Surprise

Ericsson Price and EPS Surprise
Ericsson Price and EPS Surprise

Ericsson price-eps-surprise | Ericsson Quote

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Zacks Rank: Ericsson currently carries 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:

Western Alliance Bancorporation WAL is slated to release second-quarter 2021 results on Jul 15. It has an Earnings ESP of +1.34% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Bancorp USB is scheduled to release second-quarter 2021 results on Jul 15. The company has an Earnings ESP of +0.49% and a Zacks Rank #3.

Morgan Stanley MS has an Earnings ESP of +0.35% and a Zacks Rank #3. The company is set to report second-quarter 2021 results on Jul 15.


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Morgan Stanley (MS) : Free Stock Analysis Report

Ericsson (ERIC) : Free Stock Analysis Report

U.S. Bancorp (USB) : Free Stock Analysis Report

Western Alliance Bancorporation (WAL) : Free Stock Analysis Report

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