Ericsson ERIC is set to report its third-quarter 2015 results on Oct 23, 2015.

Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 28.6%, after missing estimates for three straight quarters. The company’s trailing four-quarter average miss is 8.5%

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

Factors to Consider this Quarter

Ericsson has been on a 5G deployment spree across various parts of the world. The company believes that standardization of 5G is the cornerstone for digitalization of industries as well as broadband. Moreover, Ericsson foresees the mainstream 4G offerings to ultimately be engulfed by adoption of 5G technology in the future. Accordingly, during the last three quarters, Ericsson has been on a 4G and 5G deployment spree. Some of its notable deals are inked with local operators of South Korea, India, Turkey, Caribbean and Latin America and Indonesia.

Apart from this, Ericsson disclosed that it is buying software-based video encoding company Envivio ENVI for roughly $125 million in order to boost its foothold in the broadcasting and media industry. Also, the company extended its playout services contract with the U.K.’s frontline television network, ITV, up to 2024.

Moreover, Ericsson inked a memorandum of understanding with SK Holdings C&C to jointly facilitate the creation of specialized IoT platforms for diverse sectors such as transportation and health care.

However, Ericsson’s business is prone to be impacted by the political and economical uncertainties in its operating countries. The company has been witnessing softness in the North America market over the past few quarters, which hurt the company’s second-quarter financials too. Ericsson has been affected by reduced spending on mobile broadband from North American customers due to operators being engaged in financing acquisitions and spectrum auctions. Also, the company derives a major portion of its revenues in various foreign currencies. Hence, if any of the foreign currencies fluctuate with respect to the U.S. dollar, it adversely impacts Ericsson’s financial results, at least in the short run.

Earnings Whispers

Our proven model does not conclusively show that Ericsson is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Ericsson currently has an Earnings ESP of -6.25% for the quarter. This is because the Most Accurate estimate of 15 cents per share stands below the Zacks Consensus Estimate of 16 cents.

Zacks Rank: Ericsson’s Zacks Rank #3, when combined with negative Earnings ESP, makes surprise prediction difficult. Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings.

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

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Cogent Communications Holdings, Inc. CCOI, earnings ESP of +16.67% and Zacks Rank #3.

Inteliquent, Inc. IQNT, earnings ESP of +4.35% and Zacks Rank #3.

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