This cable television company is going through a challenging
time due to rising programming costs, Sandy related damages and
Further, sharp downward estimates revisions have resulted in a
cloudy near-term outlook for this Zacks Rank # 5 (Strong Sell)
About the Company
Cablevision Systems Corporation is one of the country's leading
media and telecommunications companies. They deliver cable,
Internet, and voice offerings throughout the New York area.
Additionally, the company owns and operates cable systems in four
Disappointing Fourth Quarter Results
The company announced its fourth quarter and full year 2012
results on February 28, 2013. The quarter resulted in a loss of 30
cents per share, 40 cents per share worse than the consensus
The company lost 50,000 video customers, 5,000 high-speed data
customers and 10,000 voice customers during the fourth
The poor performance was in part due to Hurricane Sandy which
reduced the AOCF by about $110 million. But the results were
disappointing even excluding the effect of Sandy. Further,
management's guidance for 2013 also failed to inspire.
CVC said that they had budgeted 2013 capital expenditures at a
lower level than that in 2012. They did not repurchase any shares
during the fourth quarter and do not anticipate repurchasing shares
during the first quarter of 2013.
Due to disappointing results and uninspiring guidance, four
analysts have revised their quarterly estimates downwards and seven
analysts have revised the estimates for the full-year downwards, in
the last 60 days.
Zacks consensus estimate for the current quarter now stands at
$0.06 per share versus $0.16 per share, 60 days ago, while the
full-year consensus estimate is $0.39 per share now, down from
$0.76 per share.
The Bottom Line
Strong competition from much cheaper online streaming services
provided by Netflix, Hulu and Amazon is adding to challenges faced
by cable TV operators.
Further the company anticipates significant AOCF pressure in the
first quarter of 2013 due to higher programming costs and other
expense increases, as well as the first quarter seasonal decline in
CVC is currently Zacks Rank # 5 (Strong Sell) stock and it also
has a longer-term recommendation of "Underperform".
Given above reasons, we would advise the investors to stay away
from this stock for the time being.
Investors looking for exposure to the cable industry can
consider Comcast Corp (CMCSA), which is a Zacks #2 Rank (Buy)
Though Comcast is losing basic video subscribers, the company
had managed to increase its
Internet and telephony subscribers. Comcast's bundled services
seem to working well with the customers as 75% of its video
customers subscribe to two services and almost 40% customers
subscribe to three services.
Want the latest recommendations from Zacks Investment Research?
Today, you can download
7 Best Stocks for the Next 30 Days
Click to get this free report >>
CABLEVISION SYS (CVC): Free Stock Analysis
To read this article on Zacks.com click here.