TiVo Inc. TIVO is set to report fourth-quarter fiscal 2015 results on Mar 3. Last quarter, the company posted a negative earnings surprise of 14.29%. However, TiVo has outperformed the Zacks Consensus Estimate in three out of four quarters with a positive earnings surprise average of 10.42%.
Let us see how things are shaping up for this announcement.
Factors to Consider
TiVo had reported mixed results for the third quarter of fiscal 2015. While the top line surpassed the Zacks Consensus Estimate, the bottom line missed the same. Revenues increased year over year, primarily driven by higher service and technology sales. We remain optimistic about the company’s future prospects, considering its sustained focus on product innovations and subscriber acquisition.
Further, higher number of distribution deals with cable companies will support TiVo’s expansion plans and strengthen its customer base, which, in turn, will raise the revenues. We believe that TiVo has significant growth opportunities in Western Europe and Latin America, given its partnerships with local providers. The strong balance sheet will also enable the company to pursue strategic acquisitions and aggressive share buyback programs, thereby boosting near-term growth.
However, increasing competition from the likes of Dish Network and Cablevision Systems Corp. is eroding TiVo’s subscriber base, which looms as the primary near-term headwind.
Earnings Whispers
Our proven model does not conclusively show that TiVo will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: ESP for TiVo is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at earnings of 4 cents per share.
Zacks Rank: TiVo’s Zacks Rank #4 (Sell), when combined with a 0.00% ESP, makes surprise prediction difficult.
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 momentum.
Stocks to Consider
Here are some companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Global Partners LP GLP, with an Earnings ESP of +75.00% and a Zacks Rank #2 (Buy).
H&R Block, Inc. HRB, with an Earnings ESP of +103.57% and a Zacks Rank #3 (Hold).
Otonomy, Inc. OTIC, with an Earnings ESP of +1.54% and a Zacks Rank #3.
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