Following the second-quarter 2012 earnings announcement on July
19, 2012, most of the analysts covering
Time Warner Cable Inc.
) have made mixed estimate revisions on the stock. The brokers'
outlook is based on good show from the data subscriber business,
but they remain concerned about the continuous loss of residential
Second Quarter Highlights
On a GAAP basis, quarterly net income from continuing operations
was $452 million or $1.43 per share, compared with $420 million or
$1.24 per share in the year-ago quarter. Adjusted EPS came in at
$1.48, handily beating the Zacks Consensus Estimate of $1.38.
Quarterly total revenue of $5,404 million was up 9.3% year over
year, surpassing the Zacks Consensus Estimate of $5,367 million.
Alongside, operating income before depreciation and amortization
(OIBDA) increased 10.3% year over year to $2,011 million.
Agreements of Analysts
Of the 18 analysts covering the stock in the last 7 days, one
analyst revised the estimate upward while two have made downward
revisions for the third quarter of 2012. Similarly, of the 17
analysts covering the stock in the last 7 days, two have revised
the estimates upward while one has moved in the opposite direction
for the fourth quarter of 2012.
Over the past 30 days, seven out of 18 analysts covering the
stock have downgraded the estimates while six have revised the
estimates upward for the third quarter of 2012. Similarly, for the
fourth quarter of 2012, nine out of the 17 analysts have reduced
the estimates while four have revised the estimates upward.
For 2012, out of the 20 analysts covering the stock four have
revised their estimates upward while none has revised it downward
over the last 7 days. Likewise, for 2013, out of the 21 analysts
covering the stock, two have revised the estimates upward while one
has moved in the opposite direction for the given period.
In the last 30 days for 2012, 10 out of the 20 analysts covering
the stock have increased their estimates while five have reduced
their estimates. Similarly, for 2013, out of the 21 analysts
covering the stock, eight have increased the estimates while nine
have moved in the opposite direction.
Currently, the Zacks Consensus Estimate for the third quarter of
2012 is pegged at $1.39. The projected annual growth is 25.23%. For
the fourth quarter of 2012, the Zacks Consensus Estimate of $1.58
indicates an annualized growth of 13.97%.
Magnitude of Estimate Revisions
During the last 7 days, the current Zacks Consensus Estimates
for the third quarter of 2012 is in line with the Zacks Consensus
Estimate of $1.39 while for the fourth quarter of 2012 it has
reduced by four cents from the previous estimates of $1.62,
During the last 30 days, the current Zacks Consensus Estimate
for the third quarter and fourth quarter of 2012 is 2 cents below
the earlier estimate of $1.41 and $1.60, respectively.
For 2012, the current Zacks Consensus Estimate is one cent ahead
of the prior estimate of $5.62, while for 2013 the current Zacks
Consensus Estimate is in line with the prior estimate of $6.85 in
the last 7 days. However, the Zacks Consensus Estimate for 2012 is
2 cents ahead of the earlier estimate of $5.61 in the last 30 days.
Similarly, for 2013, the current Zacks Consensus Estimate is 5
cents below the earlier estimate of $6.90.
The company has outperformed the Zacks Consensus Estimates in
three out of the four previous quarters. In the last quarter, Time
Warner Cable reported that earnings were ahead by 10 cents or
The ongoing quarter of 2012 contains a downside risk of 0.72%
(essentially a proxy for future earnings surprises) while no
surprises are expected for the fourth quarter of 2012. However,
2012 and 2013 contain a 0.18% and 0.58% downside risk
We believe that Time Warner cable's significant subscriber
growth for high speed internet 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
However, bleak macro economic situation, stiff competition from
) along with telecom carriers like
Verizon Communication Inc.
) and saturation of the multi-channel video market in the U.S. will
create significant headwind for the Company.
We maintain our long-term Neutral recommendation on Time Warner
Cable Inc. Currently, TWC has a Zacks #3 Rank, implying a
short-term Hold 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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