) is set to unveil its second-quarter 2012 results on Thursday,
August 2, 2012, before the opening bell. The current Zacks
Consensus Estimate for the second quarter is pegged at $1.14 per
share, representing annualized growth of 24.86%.
With respect to earnings surprise over the trailing four
quarters, DTV has outperformed the Zacks Consensus Estimate in
three of the last four quarters. The average earnings surprise was
a positive 5.01%, implying that the company has outdone the Zacks
Consensus Estimate by the same magnitude over that period.
On May 8, 2012, DTV reported its first quarter 2012 results.
Quarterly GAAP net income was $731 million or $1.07 per share
compared with $674 million or 85 cents per share in the year-ago
quarter. Quarterly EPS of $1.07 per share were, however, in line
with the Zacks Consensus Estimate.
Total revenue in the reported quarter came in at $7,046 million,
up 12.0% year over year, and slightly ahead of the Zacks Consensus
Estimate of $7,037 million. This upsurge was mainly buoyed by the
combined effect of net customer additions and increased average
revenue per user (ARPU) in the U.S. segment.
Agreement of Estimate Revisions
Over the past 30 days, only 1 out of the 16 estimates on DIRECTV
has been upwardly revised while 1 was downwardly revised for the
second quarter of 2012. Likewise, for the third quarter of fiscal
2012, none of the 16 estimates were revised upwards but four were
For fiscal 2012, there has been no upward revision in estimates
while 5 out of 17 estimates moved in the opposite direction over
the last 30 days. Similarly, for fiscal 2013, only 1 out of the 14
estimates were revised upward while 3 moved downwards.
The analysts remain apprehensive about the subscriber loss in
the U.S. market coupled with higher programming cost, which could
impact its margin. Moreover, most of the analysts have revised
their estimates downward based on the belief that recent
) over programming fees could lead to increased churn rate in
Magnitude of Estimate Revisions
Relative to these downward revisions of estimates, during the
last 30 days, the current Zacks Consensus Estimate for the second
quarter of 2012 was a penny higher than the previous estimate of
$1.13. However, for the third quarter of 2012, the current Zacks
Consensus Estimate was 2 cents below the previous estimate of 98
cents per share.
For fiscal 2012, the current Zacks Consensus Estimate was 4
cents below the previous estimate of $4.34 per share. Likewise, for
fiscal 2013, the current Zacks Consensus Estimate was 5 cents below
the previous estimate of $5.31 per share.
The current Zacks Consensus Estimates for the ongoing quarter
contains 1.75% upside potential while for the upcoming quarter, it
is reflecting a 3.13% downside risk (essentially a proxy for future
earning surprises). Similarly, for fiscal 2012, the current Zacks
Consensus Estimates' contains a downside risk of 1.17%, while
fiscal 2013 estimates contain a downside risk of 2.66%.
Strong fundamentals coupled with huge subscriber and ARPU growth
across all its segments make the company quite popular within the
However, within the satellite TV industry, DIRECTV is facing
stiff competition from its nearest rival
DISH Network Corp.
). Furthermore, U.S. telecom giants,
Verizon Communication Inc.
) are increasingly rolling out their fiber-based network to provide
video services. Additionally, Internet video streaming companies
), Hulu, YouTube have become major threats to the overall pay-TV
We, thus, maintain our long-term Neutral recommendation for
DIRECTV. Currently, the shares of DIRECTV maintain a Zacks #3 Rank,
implying a short-term Hold rating.
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