Liberty Global plc (LBTYA), a leading cable MSO (multi service operator) in Europe, is scheduled to release its third-quarter 2014 financial numbers on Nov 5, after market close.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by a huge margin of 92.31%. Moreover, the company has delivered negative earnings surprises in three of the prior four quarters, with an average miss of 83.03%. Let’s see how things are shaping up ahead of this announcement.
Factors Likely to Influence This Quarter
Recently, the company received the European Union (EU)’s regulatory approval to acquire full control of Ziggo N.V., the largest cable MSO in the Netherlands. The merger will thus create a dominant cable TV operator in the Netherlands with approximately 10.8 million revenue generating units.
Liberty Global boasts a strong presence in the Dutch cable TV market as its UPC Broadband Holding BV unit is the second largest cable MSO in the nation. We believe the long-term business fundamentals of the company are very intriguing, primarily owing to strong demand for its digital cable-TV services, the acquisition of TV content producer All3Media, faster broadband and triple-play bundled offerings, strong cash flow, and the growing popularity of Horizon TV services.
However, recessionary pressure in the European region, saturated European markets, stiff competition, high integration risks, foreign currency exchange rate risks, considerable debt and mounting programming expenses may act as headwinds for Liberty Global, moving ahead. Also, low per capita income may stall people from spending more on exorbitant high-speed bundled communication and HD-DVR-based digital video services.
Earnings Whispers?
Our proven model does not conclusively show that Liberty Global 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, that is not the case here as elaborated below.
Zacks ESP: Liberty Global has an earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 14 cents.
Zacks Rank: Liberty Global has a Zacks Rank #4 (Sell). 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.
Stocks to Consider
Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
BlackBerry Ltd. (BBRY) has an earnings ESP of +83.33% and carries a Zacks Rank #2 (Buy).
Lumos Networks Corp. (LMOS) has an earnings ESP of +15.39% and a Zacks Rank #2.
DragonWave Inc. (DRWI) has an earnings ESP of +16.67% and carries a Zacks Rank #3 (Hold).
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