Liberty Global plc (LBTYA), a leading cable MSO (multi service operator) in Europe, is scheduled to release its fourth-quarter 2014 financial numbers on Feb 12, 2015, after market close.
In the last reported quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by 42.86%. Let’s see how things are shaping up ahead of this announcement.
Factors Likely to Influence this Quarter
Going forward, we believe Liberty Global’s revenues will continue to benefit from its triple-play offering of video, broadband, and telephone, as it signs up more bundled customers in Europe and Latin America. We believe the long-term fundamentals of the company are quite intriguing, thanks to strong demand for its digital cable-TV services and the growing popularity of Horizon TV services.
Moreover, the acquisition of TV content producer All3Media and the takeover of around 6.4% stake in ITV plc – the largest commercial TV broadcaster in the U.K., should drive RGUs (revenue generating units) as well as boost the company’s subscriber base, moving ahead.
However, recessionary pressure in the European region, stiff competition, mounting programming expenses and saturated demand in European markets may act as headwinds for Liberty Global in the future. Also, low per capita income may stall people from spending more on exorbitant high-speed bundled communication and HD-DVR-based digital video services. Moreover, business integration risks persist as Liberty Global has recently acquired several companies, either partially or fully.
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, 2 or 3 for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Liberty Global has an earnings ESP of -75.00%. This is because the Most Accurate estimate stands at 3 cents while the Zacks Consensus Estimate is pegged higher at 12 cents.
Zacks Rank: Liberty Global’s Zacks Rank #2 (Buy) 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 Zacks Rank #4 and 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 you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Grupo Televisa, S.A.B. (TV) has an earnings ESP of +13.51% and a Zacks Rank #3 (Hold).
Cablevision Systems Corporation (CVC) has an earnings ESP of +11.11% and a Zacks Rank #3.
Comcast Corporation (CMCSA) has an earnings ESP of +1.30% and a Zacks Rank #3.
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