Leading cable multi service operator (MSO) in the U.S., Comcast Corporation CMCSA is scheduled to report fourth-quarter 2015 financial numbers on Feb 3, before the opening bell.
Last quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Moreover, the trailing four-quarter average earnings surprise stands at 1.69%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Comcast is focusing on the business services division, which is one of the fastest growing divisions at the company having clocked a growth rate of 19.5% last quarter. Increased investments in this space should not only help diversify the company’s business operations but also create a stable revenue stream.
Moreover, Comcast’s focused on enhancing its offerings, its Stream TV service launch and the deployment of fiber-based 2 Gbps residential broadband Internet service – Gigabit Pro – should boost this quarter’s results. Also, significant investments in its theme park business and Universal Studio’s splendid performance are likely to ramp up Comcast’s top as well as bottom line in the to-be-reported quarter.
On the flip side, growing competitive threat, consolidation-related woes, mounting programming costs and persistent video subscriber loss are certain factors that may weigh upon the quarter’s results.
Earnings Whispers
Our proven model does not conclusively show that Comcast 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: Comcast has an earnings ESP of -1.22%. This is because the Most Accurate estimate stands at 81 cents while the Zacks Consensus Estimate is pegged higher at 82 cents.
Zacks Rank: Comcast has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, 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 as our model shows they have the right combination of elements to post an earnings beat this quarter:
Time Warner Inc. TWX has an earnings ESP of +3.00% and a Zacks Rank #2.
Scripps Networks Interactive, Inc. SNI has an earnings ESP of +1.98% and a Zacks Rank #3.
The Walt Disney Company DIS has an earnings ESP of +1.38% and a Zacks Rank #3.
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