Does customer satisfaction matter to a stock's
The American Customer Satisfaction Index says it tends to
correlate, though two of the three stocks with the best scores
last year (H.J. Heinz (
) 89,Clorox (
) 88 andApple (
) 87) were slow-moving dividend stocks rather than big
Another factor to consider is improvement on the 0-100
In 2012,Time Warner Cable (
) increased its score in the satisfaction index from 59 to 63, up
about 7% from 2011.
Out of more than 230 companies that the Ann Arbor, Mich.-based
ACSI tracks, only a handful improved their score by a higher
percentage than Time Warner Cable.
So far this year, Time Warner Cable's stock is up about 40%
vs. a 4% decline last year. The stock is No. 11 in IBD's Big Cap
While improvement in customer satisfaction has to help in the
long run, the key factors for a stock are the sort of
considerations behind a strong Composite Rating. Time Warner's is
The Composite Rating combines all five IBD ratings into a
Time Warner's earnings increased 15%, 40%, 29% and 23% in the
past four quarters. Revenue advanced 4%, 4%, 6% and 9% in the
same period. The Street expects EPS to jump 28% on a 10% revenue
gain in the third quarter.
Operating cash flow per share was more than three times EPS,
an extremely strong number.
Pretax margin was the highest since 2005. After-tax margin has
been running in the 8% to 9% range in recent quarters, also near
The Accumulation-Distribution Rating is A. The up-down volume
ratio is a bullish 1.6, according to Stock Checkup at
Drawbacks include heavy debt, a good but not great 15%
three-year growth rate and a lackluster three-year sales growth
rate of 5%. Also, funds have lightened their stake by 7% over the
past nine months, even as the number of funds holding shares
The quarterly dividend is 56 cents a share, up 40% since late
2010. Time Warner Cable separated fromTime Warner (
) in 2009.
Time Warner Cable's annualized dividend yield is 2.5%.