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Can Grupo Televisa (TV) Turn It Around This Earnings Season? - Analyst Blog

Grupo Televisa, S.A.B. ( TV ), the largest broadcast TV operator in Mexico, is scheduled to report fourth-quarter 2014 financial numbers on Feb 20, 2015, after market close.

Last quarter, Televisa had delivered a massive 111.76% negative earnings surprise. Incidentally, the company's earnings have missed the Zacks Consensus Estimate in all of the last four quarters, which led to a four-quarter average miss of 38.59%. Let's see how things are shaping up ahead of this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Televisa 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 +13.51%. This is because the Most Accurate estimate stands at 42 cents, whereas the Zacks Consensus Estimate is pegged lower at 37 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank : Televisa currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1, 2 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 Televisa's Zacks Rank #3 and +13.51% ESP makes us reasonably confident of an earnings beat at the company.

What is Driving the Better-than-Expected Earnings?

Last month, Televisa completed the sale of its 50% stake in Iusacell, the third largest wireless service provider in Mexico, to Grupo Salinas for $717 million. Notably, Televisa is likely to utilize the proceeds from the sale to finance its recent acquisition of cable TV operator, Cablevision Red, which has about 650,000 revenue-generating units. Televisa expects this takeover to generate around $136 million of revenues and $68 million of EBITDA (earnings before interest, tax, depreciation and amortization) in 2015.

Additionally, Televisa is also likely to gain significantly from its ownership stake in U.S. broadcaster Univision Communications Inc., which is the largest Spanish-language broadcaster in the U.S.

However, the new telecommunications industry reform bill of the Mexican government will allow America Movil S.A.B. de C.V. ( AMX ) to enter the broadcasting market of Mexico, which may substantially reduce Televisa's advertisement revenues. Intensifying competition in the pay-TV industry may also pose a near-term headwind for the company.

Other Stocks to Consider

Televisa is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Townsquare Media, Inc. ( TSQ ) has an earnings ESP of +9.52% and a Zacks Rank #3.

AMC Networks Inc. ( AMCX ) has an earnings ESP of +6.86% and a Zacks Rank #3.

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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 Nasdaq, Inc.


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

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