Is Comcast (CMCSA) Poised to Beat Earnings Estimates in Q2? - Analyst Blog

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Leading cable multi service operator (MSO) in the U.S., Comcast Corporation ( CMCSA ), is slated to report its second-quarter 2014 results on July 22, before the opening bell.

In the previous quarter, Comcast reported a positive earnings surprise of 6.25%. In-fact, the company has outpaced the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings beat of 3.7%. Let's see how things are shaping up for this announcement.

Factors at Play

After a gap of 26 quarters, Comcast has finally gained a healthy number of video subscribers over the last two quarters. Subscriber gain was primarily driven by the launch of innovative services, enhanced customers support and improved customer retention effort.

Meanwhile, the company's Cable business continues to perform well with the NBC Universal segment also witnessing gradual improvement. In the first quarter of 2014, the company generated $6.87 billion in revenues at the NBC Universal segment, primarily driven by the tremendous success of the Sochi 2014 Olympics from which the company generated nearly $1.1 billion in revenues.

The company also recently aired the world's biggest sporting event - the 2014 FIFA World Cup - on Comcast's Xfinity TV microsites and Xfinity TV Go app. We believe Comcast's addition of such customer-oriented shows and features will not only enhance the company's existing subscriber base but will also help reduce churn rate, going forward.

However, the U.S. pay-TV market is reaching a saturation level. Moreover, stiff competition from large carriers and other low-cost video streaming companies coupled with mounting programming costs and debt levels may act as headwinds for the company in the near term.

Earnings Whispers?

Our proven model does not conclusively show that Comcast is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zero Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 73 cents. This leads to an ESP of 0.00% for Comcast.

Zacks Rank: Comcast carries a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:  

Charter Communications, Inc. ( CHTR ), with earnings ESP of +387.5% and a Zacks Rank #1 (Strong Buy).

Cablevision Systems Corp. ( CVC ), with earnings ESP of +20.0% and a Zacks Rank #2 (Buy).

Dish Network Corp. ( DISH ), with earnings ESP of +15.4% and a Zacks Rank #3 (Hold).


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DISH NETWORK CP (DISH): Free Stock Analysis Report

CABLEVISION SYS (CVC): Free Stock Analysis Report

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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: MSO , CMCSA , CHTR , DISH , CVC

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