) is slated to release its third-quarter 2012 results on Tuesday,
November 2, 2012, before the opening bell. The current
Zacks Consensus Estimate for the fourth quarter is pegged at 92
cents, representing an annualized growth of 31.79%.
With respect to earnings surprise, DTV has outperformed the
Zacks Consensus Estimate over two out of the last four quarters.
The average earnings surprise over the trailing four quarters was
a positive 1.20%, implying that the company has outdone the Zacks
Consensus Estimate by the same magnitude over two out of the last
On August 2, 2012, DTV reported its second-quarter fiscal 2012
results. Quarterly GAAP net income was $711 million or $1.09 per
share compared with $701 million or 91 cents per share in the
year-ago quarter. Quarterly earnings per share of $1.09 per share
fell short of the Zacks Consensus Estimate of $1.14.
Total revenue in the reported quarter came in at $7,224
million, up 9.5% year over year, and slightly ahead of the Zacks
Consensus Estimate of $7,203 million. Such impressive growth in
revenue was mainly attributable to huge subscriber growth in
Latin American region.
Agreement of Estimate Revisions
In the last 30 days, out of the 16 analysts covering the
stock, four analysts increased their EPS estimates for the third
quarter of 2012 while an equal number of analysts have decreased
their estimates for the same time period. Similarly, for fourth
quarter of fiscal 2012, out of the 14 analysts covering the
stock, two analysts raised their EPS estimates but four analysts
moved in the opposite direction.
For fiscal 2012, in the last 30 days, out of the 17 analysts
covering the stock, four analysts increased their EPS estimates
while a similar number of analysts declined the same. Similarly,
for fiscal 2013, out of the 16 analysts covering the stock, four
analysts raised their EPS estimates while five moved in the
Magnitude of Estimate Revisions
During the last 30 days, the current Zacks Consensus Estimate
was in line with the previous estimate of 92 cents for the third
quarter of 2012 while for the fourth quarter of 2012,the current
Zacks Consensus Estimate was3 cents below the previous estimate
For fiscal 2012, the current Zacks Consensus Estimate was at
par with the previous estimate of $4.23. Likewise, for fiscal
2013, the current Zacks Consensus Estimate was just a penny below
the earlier estimate of $5.20.
The current Zacks Consensus Estimates for the ongoing quarter
contains 1.09% downside potential while for the upcoming quarter,
it is reflecting a 1.79% upside potential (essentially a proxy
for future earning surprises). Similarly, for fiscal 2012 and
2013, the Zacks Consensus Estimates' downside potentials are
0.24% and 1.54%, respectively.
Strong fundamentals along with huge subscriber growth across
all its segments make the company quite popular within the pay-TV
However, within the satellite TV industry, DIRECTV is facing
intense competition from its nearest rival
). Furthermore, U.S. telecom giants,
) are increasingly rolling out their fiber-based network in order
to provide video services. Additionally, the newly developed
Internet video streaming companies like Netflix, Hulu and YouTube
have become major threats to the overall pay-TV industry.
We, thus, maintain our long-term Neutral recommendation on
DIRECTV. Currently, the company has a Zacks#3 Rank, implying a
short-term Hold rating on the stock.
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