Is Cablevision Systems (CVC) Poised for Strong Q2 Earnings? - Analyst Blog


We expect Cablevision Systems Corporation ( CVC ) to beat earnings when the company reports its second quarter financial numbers on Aug 5, 2014, before the opening bell.

Last quarter, the company's earnings surpassed the Zacks Consensus Estimate by a substantial 150%. Moreover, the company has outpaced the Zacks Consensus Estimate in three of the past four quarters, with an average earnings surprise of 88.8%. Let's see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Cablevision Systems is likely to beat earnings because it has the perfect combination of two key ingredients.

Zacks ESP : Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +33.33%. This is because the Most Accurate estimate stands at 20 cents, whereas the Zacks Consensus Estimate is pegged at 15 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. 

Zacks Rank: Cablevision Systems currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Cablevision Systems' Zacks Rank #3 and +33.33% ESP makes us reasonably confident of a positive earnings beat on Aug 5.

What is Driving the Better-than-Expected Earnings?

Cablevision has undertaken several initiatives to enhance the quality of its video offerings. During the last reported quarter, the company extended its TV to GO services to more than 100 networks. Moreover, management has revamped Cablevision's Spanish language programming and sports and entertainment packages. All these initiatives should drive the company's revenues higher in the coming quarters.

On the flip side, Cablevision continues to lose video subscribers. We believe that stiff competition from satellite TV and telecom operators coupled with mounting programming expenses will continue to act as margin headwinds in the quarters to come.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Dish Network Corp. ( DISH ) has an earnings ESP of +15.39% and holds a Zacks Rank #3.

Windstream Holdings, Inc. ( WIN ) has an earnings ESP of +12.50% and holds a Zacks Rank #2.

RigNet, Inc. ( RNET ) has an earnings ESP of +6.25% and carries a Zacks Rank #3.

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DISH NETWORK CP (DISH): Free Stock Analysis Report

CABLEVISION SYS (CVC): Free Stock Analysis Report

WINDSTREAM HLDG (WIN): Free Stock Analysis Report

RIGNET INC (RNET): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: DISH , CVC , WIN , RNET

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