Time Warner Cable Inc. (TWC) is scheduled to report its fourth-quarter 2014 financial numbers before the opening bell on Jan 29.
Why a Likely Positive Surprise?
Our proven model shows that Time Warner Cable is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +2.38%. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Time Warner Cable currently has a Zacks Rank #3. Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
The combination of Time Warner Cable’s Zacks Rank #3 and +2.38% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-Than-Expected Earnings?
The Business Services segment is a major growth driver for the company that has benefited significantly from the rollout of TWC Max. Moreover, growing demand for cloud service offerings coupled with the acquisition of DukeNet will further step up high-speed data revenue growth and business revenues.
The addition of NBC Universal’s Sports, News and Entertainment Programming to its TV Everywhere application and a paid interconnection deal with Netflix Inc. should also drive Time Warner Cable’s top line.
The launch of innovative services, continuous dividend payments and adoption of various strategies are also likely to propel growth for the company.
However, rising competition from cable and telecom players coupled with mounting programming expenses will continue to hurt profits.
Other Stocks to Consider
Other companies you may want to consider on the basis of our model which shows that these have the right combination of elements to post an earnings beat this quarter include:
Charter Communications, Inc. (CHTR) with an earnings ESP of +121.74% and a Zacks Rank #2.
Comcast Corporation (CMCSA) with an earnings ESP of +1.30% and a Zacks Rank #3.
American Tower Corporation (AMT) with an earnings ESP of +4.0% and a Zacks Rank #3.
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