Comcast Corp
. (
CMCSA
) is slated to release its second quarter 2012 results on
Wednesday, August 1, 2012, before the opening bell. The current
Zacks Consensus Estimate for the second quarter is pegged at 48
cents per share, representing an annualized growth of 13.62%.
With respect to earnings surprises, Comcast has outperformed the
Zacks Consensus Estimate in three out of the trailing four
quarters. The average earnings surprise was a positive 1%.
First Quarter Recap
On May 2, 2012, Comcast reported its first quarter 2012
financial results. GAAP net income for the first quarter of 2012
was $1,224 million or 45 cents per share compared with a net income
of $943 million or 34 cents per share in the prior-year quarter.
Quarterly EPS of 45 cents surpassed the Zacks Consensus Estimate of
42 cents. Total revenue in the first quarter of 2012 came in at
$14,878 million, up 9.6 % year over year and well above the Zacks
Consensus Estimate of $14,405 million.
Operating margin in the first quarter of 2012 was 18.5% compared
with 18.3% in the prior-year quarter. During the reported quarter,
Comcast repurchased 25.9 million common share for $750million and
paid dividends worth $304 million.
Agreement of Estimate Revisions
In the last 30 days, out of the 18 analysts covering the stock,
two analysts decreased the EPS estimate for the second quarter of
2012 while one analyst increased the same. Similarly, for the third
quarter of fiscal 2012, out of the 17 analysts covering the stock,
only one analyst slashed the EPS estimate.
For fiscal 2012, in the last 30 days, out of the 21 analysts
covering the stock, three analysts reduced the EPS estimate but two
analysts raised the same. Likewise, for fiscal 2013, out of the 20
analysts covering the stock, one analyst increased the EPS
estimates while two moved in the opposite direction.
Magnitude of Estimate Revisions
For the second and third quarter of 2012, during the last 30
days, the current Zacks Consensus Estimate was in line with the
previous estimate of 48 cents and 45 cents, respectively.
Similarly, for fiscal 2012 and 2013, the current Zacks Consensus
Estimate was at par with the earlier estimate of $1.90 and $2.22,
respectively.
Earning Surprises
In the previous quarter, Comcast reported EPS of 45 cents, which
beat the Zacks Consensus Estimate by 3 cents. The current Zacks
Consensus Estimates for the ongoing quarter and the upcoming
quarter contain downside potential of 6.25% and 2.22%, respectively
(essentially a proxy for future earning surprises). Similarly, for
fiscal 2012 and 2013, the Zacks Consensus Estimate contains
downside risk of 1.05% and 0.45%, respectively.
Our Recommendation
We believe that continuous share repurchase plan, better churn
rate and innovative product offering strategies will drive the
stock upward going forward. Moreover, Comcast is also aggressively
deploying the DOCSIS 3.0 (also called Wideband) technology to
upgrade its existing customers to high-speed network together with
all digital networks.
However, higher operating expenses coupled with stiff
competition from formidable rivals like
Time Warner Cable
(
TWC
) and other satellite operators like
DIRECTV
(
DTV
) and
DISH Network Corporation
(
DISH
) will affect profitability going forward. Moreover, huge debt,
higher operating expense coupled with continuous loss of video
subscribers will affect its bottom-line growth. We, thus, maintain
our long-term Neutral recommendation on Comcast.
Currently, Comcast has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
COMCAST CORP A (CMCSA): Free Stock Analysis
Report
DISH NETWORK CP (DISH): Free Stock Analysis
Report
DIRECTV (DTV): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
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