Following the first quarter earnings announcement on April 26,
most of the analysts covering
Time Warner Cable Inc.
) have slashed their estimates. The brokers' bearish stance is
based on the company's continuous loss of residential video
First Quarter Highlights
On a GAAP basis, quarterly net income was $382 million or $1.20
per share, compared with $325 million or 93 cents in the year-ago
quarter. Adjusted EPS came in at $1.30, substantially beating the
Zacks Consensus Estimate of $1.22.
Quarterly total revenue of $5,134 million was up 6.4% year over
year, and surpassed the Zacks Consensus Estimate of $5,121 million.
Operating income before depreciation and amortization (OIBDA)
increased 8.2% year over year to $1,873 million.
Agreement of Analysts
Of the 18 analysts covering the stock in the last 7 days, none
has revised the estimate upward while one analyst has revised the
estimate downward for the second quarter of 2012. For the third
quarter of 2012, of the 17 analysts covering the stock, none has
revised the estimates upward while only one has revised the
For fiscal 2012, out of the 21 analysts covering the stock in
the last 7 days, none has raised the estimate while one analyst
lowered it. However, for fiscal 2013, out of the 20 analysts
covering the stock, none has raised or lowered the estimates.
Currently, the Zacks Consensus Estimate for the second quarter
of fiscal 2012 is $1.39, with a projected annual growth of 17.61%.
For the third quarter of fiscal 2012, the Zacks Consensus Estimate
of $1.42 indicates an annual gain of 27.87%.
Magnitude of Estimate Revisions
During the last 7 days, the current Zacks Consensus Estimates
for the second quarter and third quarter of 2012 has been in line
with previous estimates of $1.39 and $1.42 respectively. However,
for fiscal 2012, the current Zacks Consensus Estimates was a penny
below the prior estimate of $5.64. For fiscal 2013, the current
Zacks Consensus Estimates was three cents below the earlier
The company has outdone the Zacks Consensus estimates in three
out of four quarters. In the first quarter of 2012, Time
Warner Cable outpaced the consensus estimate by 8 cents or
The ongoing quarter of fiscal 2012 contains a 0.72% downside
risk (essentially a proxy for future earnings surprises), while
estimates for the third quarter of 2012 are in line with the Zacks
Consensus. Similarly, fiscal 2012 estimates are in line with the
Zacks Consensus, while 2013 reflects a downside risk of 0.44%.
We believe that Time Warner cable's significant subscriber
growth for broadband and digital phone services, decision to expand
its Wi-Fi network and its new strategic move to consolidate its
Cable TV business will act as positive catalysts in the long
However, a bleak macro economic situation, stiff competition
) along with telecom carriers like
Verizon Communication Inc
) and saturation of the multi-channel video market in the U.S. may
create significant headwinds for the company.
We maintain our long-term Neutral recommendation on Time Warner
Cable. Currently, Time Warner Cable has a Zacks #2 Rank, implying a
short-term buy rating on the stock.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
COMCAST CORP A (CMCSA): Free Stock Analysis
AT&T INC (T): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
VERIZON COMM (VZ): Free Stock Analysis Report
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