On Jun 2, 2015, Zacks Investment Research downgraded Liberty Global plc LBTYA by a notch to a Zacks Rank #3 (Hold).
Over the last 30 days, the company has witnessed downward revisions for the current year with the Zacks Consensus Estimate for earnings moving down from break-even earnings to a loss of 5 cents. Over the same time frame, the company’s second-quarter earnings estimate has scaled down to a loss of 5 cents from a profit of 5 cents.
Also, Liberty Global posted disappointing financial numbers in the first quarter of 2015 First-quarter net loss per share of 61 cents was significantly wider than the Zacks Consensus Estimate of a loss of 6 cents. Notably, in the quarter, the company had added just 68,000 organic revenue generating units, down a whopping 81.6% year over year.
Stiff competition, saturated demand in European markets, high integration risks and mounting programming expenses are major headwinds for the company at present. Liberty Global is also facing considerable foreign exchange rate fluctuations as it operates in 14 countries outside the U.S. Meanwhile, the prevailing foreign exchange rate volatility may further impact earnings in the forthcoming quarters.
Liberty Global exited the first quarter of 2015 with nearly $42.8 billion in debts. Moreover, regular share repurchases coupled with acquisition plans are likely to further undermine the company’s cash flow and also expand its leverage position.
Stocks to Consider
Better-ranked stocks in this sector include Comcast Corporation CMCSA, BCE Inc. BCE and Nippon Telegraph and Telephone Corporation NTT. All these stocks hold a Zacks Rank #2 (Buy).
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