Liberty Global plc LBTYA, a leading cable MSO (multi-service operator) in Europe, is scheduled to release its third-quarter 2015 results on Nov 5, after market close.
Last quarter, the company incurred a significant loss. The Zacks Consensus had however estimated earnings, resulting in a mammoth negative surprise of 1,160%. Moreover, the company’s bottom line lagged the Zacks Consensus Estimate in three of the trailing four quarters, with an average miss of 662.62%. Let’s see how things are shaping up ahead of this announcement.
Factors Likely to Influence this Quarter
The merger negotiations between Liberty Global and Vodafone Group Plc VOD came to an end recently after both the companies failed to reach an agreement on valuations. A merger would certainly have helped Liberty Global achieve economies of scale to remain competitive in certain markets, specifically Western Europe.
Meanwhile, stiff competition, high integration risk, mounting programming expenses, foreign exchange rate volatility and saturated demand in European markets are factors that might weigh upon the to-be-reported quarter’s performance.
However, robust demand for its digital cable-TV services, enhanced broadband and triple-play bundled offerings, rising popularity of Horizon TV services, and continuous expansion of next-generation services are expected to aid Liberty Global’s financial performance in the third quarter. Further, we believe that the acquisition of Irish TV broadcaster – TV3 – will help the company to further expand in Ireland and check its declining subscriber count there.
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’s earnings ESP is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are poised at 4 cents.
Zacks Rank: Liberty Global has a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
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:
Townsquare Media, Inc. TSQ has an earnings ESP of +2.50% and a Zacks Rank #2.
Scripps Networks Interactive, Inc. SNI has an earnings ESP of +1.03% and a Zacks Rank #2.
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