Time Warner Cable Inc
) is slated to release its second quarter 2012 results on Thursday,
August 2, before the opening bell. The current Zacks Consensus
Estimate for the second quarter is pegged at $1.38, representing
annualized growth of 16.55%.
With respect to earnings surprises over the trailing four
quarters, Time Warner Cable has outperformed the Zacks Consensus
Estimate in three out of the last four quarters. The average
earnings surprise was positive 5.36%.
First Quarter Recap
On April 26, 2012, Time Warner Cable reported its first quarter
2012 financial results. Quarterly GAAP net income was $382 million
or $1.20 per share compared with a net income of $325 million or 93
cents per share in the prior-year quarter. First-quarter 2012
adjusted (excluding special items) EPS of $1.30 easily surpassed
the Zacks Consensus Estimate of $1.22.
Total revenue in the quarter increased 6.4% year over year to
$5,134 million, surpassing the Zacks Consensus Estimate of $5,121
million. Quarterly adjusted operating income before depreciation
and amortization (OIBDA) climbed 8.2% year over year to $1,873
million. GAAP operating income grew 6.9% year over year to $1,042
Agreement of Estimate Revisions
In the last 30 days, out of the 17 analysts covering the stock,
one analyst increased the EPS estimate for the second quarter of
2012, but two analysts reduced. However, for the third quarter of
fiscal 2012, out of the 15 analysts covering the stock, one analyst
raised EPS estimates, while three revised downwards.
For fiscal 2012, in the last 30 days, out of the 20 analysts
covering the stock, two moved their estimates upward, while two
analysts moved downward. However, for fiscal 2013, in the last 30
days, out of the 20 analysts covering the stock, one analyst moved
the estimates upward, while two analysts moved it downwards.
Magnitude of Estimate Revisions
The current Zacks Consensus Estimates for the second quarter of
fiscal 2012 has been stable over the last 30 days, at US$1.38.
However, the estimates for the third quarter of fiscal 2012 over
the last 30 days have changed by a penny to US$ 1.46.
The current Zacks Consensus Estimate for fiscal 2012 and 2013
remained stable over the last 30 days, at US$5.65 and US$6.89,
The current Zacks Consensus Estimate for the ongoing quarter
contains a 0.00% upside potential, while for the upcoming quarter
it is reflecting a 4.11% downside risk (essentially a proxy for
future earnings surprises). Similarly, for fiscal 2012, the Zacks
Consensus Estimate reflects a 0.89% downside risk, while the same
for 2013 contains a downside risk of 0.73%.
We believe that continuous loss of subscribers coupled with
stiff competition from online video streaming companies like
) and Hulu will hurt profitability going forward.
Additionally, telecom service providers like
) are quickly gaining market share from the cable MSO's, which is
believed to be a threat for Time Warner. However, an increase in
rates coupled with the continuous deployment of DOCSIS 3.0
technology will drive the commercial segment revenue going
Moreover, acquisition of NaviSite will further drive top-line
growth. We thus maintain our long-term Neutral recommendation on
Time Warner Cable.
Currently, Time Warner Cable has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
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