Liberty Global plc LBTYA, a leading cable MSO (multi service operator) in Europe, is scheduled to release its second-quarter 2015 results on Aug 4, after market close.
Last quarter, the company incurred a loss significantly wider than the Zacks Consensus Estimate of loss, resulting in a mammoth negative earnings surprise of 916.67%. Moreover, the company’s bottom line has lagged the Zacks Consensus Estimate in three of the trailing four quarters, with an average miss of 395.70%. Let’s see how things are shaping up ahead of this announcement.
Factors Likely to Influence this Quarter
Robust demand for its digital cable-TV services, enhanced broadband and triple-play bundled offerings, strong cash flow, rising popularity of Horizon TV services and continuous expansion of next-generation services should aid Liberty Global’s financial performance in the second quarter. Meanwhile, Liberty Global’s consistent expansion in the Irish market lends optimism and should help the company check its declining subscriber count therein.
However, stiff competition, saturated demand in European markets, high integration risks and mounting programming expenses are certain factors that may weigh upon the quarter’s performance. Moreover, the prevailing foreign exchange rate volatility may further impact earnings in the to-be-reported quarter.
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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Liberty Global has an earnings ESP of -20.00%. This is because the Most Accurate estimate of earnings stands at 4 cents while the Zacks Consensus Estimate is pegged higher at 5 cents.
Zacks Rank: Liberty Global has a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.
Note that, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that you may consider instead as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ashford Hospitality Trust, Inc. AHT, which has an earnings ESP of +4.35% and a Zacks Rank #1.
Sprint Corp. S, which has an earnings ESP of +25.00% and a Zacks Rank #3.
The Walt Disney Company DIS, which has an earnings ESP of +2.16% and a Zacks Rank #3.
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