Cablevision Systems Corporation CVC, a leading media and telecommunications company, is slated to release its second-quarter 2015 financial numbers before the market opens on Aug 7.
In the last reported quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 17.65%. Moreover, the company has delivered positive earnings surprises in all of the prior four quarters, with an average beat of 38.02%. Let’s see how things are shaping up ahead of this announcement.
Factors Likely to Influence this Quarter
We believe Cablevision’s deal with Hulu to offer the latter’s popular on-demand services should help the company minimize its video customer churn rate in the to-be-reported quarter. Also, Cablevision unveiled an Internet package that bundles in a digital antenna for TV service. The new technology which combines high-speed broadband with an antenna to watch online broadcast networks should help lure more customers who prefer low-cost online streaming services over expensive bundled TV offerings. Moreover, increased Wi-Fi deployment and continuous launch of innovative products and services should further boost the quarter’s performance.
However, persistent loss of video subscribers, stiff competition from satellite TV and telecom operators and a highly leveraged balance sheet are some of the factors that may affect the quarter’s performance negatively.
Earnings Whispers
Our proven model does not conclusively show that Cablevision 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: Cablevision has an earnings ESP of -4.17%. This is because the Most Accurate estimate stands at 23 cents while the Zacks Consensus Estimate is pegged higher at 24 cents.
Zacks Rank: Cablevision has a Zacks Rank #3 which increases the predictive power of ESP. Nevertheless, 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 to consider instead as our model shows these have the right combination of elements to post an earnings beat this quarter:
Nexstar Broadcasting Group, Inc. NXST has an earnings ESP of +12.25% and carries a Zacks Rank #2.
Live Nation Entertainment, Inc. LYV has an earnings ESP of +14.29% and carries a Zacks Rank #3.
The Madison Square Garden Company MSG has an earnings ESP of +4.76% and a Zacks Rank #3.
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