Can TiVo (TIVO) Pull Off a Surprise Again in Q4 Earnings?

TiVo CorporationTIVO is set to report fourth-quarter 2016 results on Feb 15. It should be noted that TiVo Corporation was formerly known as Rovi Corporation. Upon successfully completing the acquisition of TiVo Inc. early this September, Rovi adopted the iconic TiVo brand name.

Notably, last quarter was the combined company's first quarterly results, wherein it posted a strong positive earnings surprise of 267.86%.

Let us see how things are shaping up for the second quarterly results of the combined company.

Factors to Consider

Prior to the acquisition, Rovi used to provide a set of solutions that allowed businesses to protect, enable and distribute digital goods to consumers, helping them discover and manage digital media across multiple channels. On the other hand, TiVo Inc. pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company expanded its capabilities beyond hardware sales and patent licensing to online subscription services.

Therefore, the merger has brought together two leading players in the media entertainment industry with complementary products and services as well as a number of patented technologies. The new TiVo Corporation has now become the global leader in entertainment technology and audience insights. The company has a diverse product portfolio that ranges from interactive program guide to the DVR. The combined company has emerged as the world's leading media and entertainment provider to deliver the ultimate entertainment experience.

Similar to the last quarter's results, we expect the combined company's overall fourth quarter performance to witness positive impact from the merger. Notably, in the third quarter, TiVo had registered a 33.3% year-over-year jump in revenues, while it had reported earnings of 59 cents compared with a loss of 22 cents in the year-ago quarter.

Furthermore, TiVo's to-be-reported quarterly results are likely to benefit from a series of deals entered with streaming video giant Netflix Inc. NFLX last quarter.

However, intense competition, particularly from companies like Dish Network and Cablevision Systems Corp., is eroding TiVo's subscriber base. This may negatively impact TiVo's fourth-quarter results.

Earnings Whispers

Our proven model does not conclusively show that TiVo is likely to beat the Zacks Consensus Estimate in its upcoming release. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for TiVO is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 45 cents per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: TiVo has a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

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

TiVo Corporation Price and EPS Surprise

TiVo Corporation Price and EPS Surprise | TiVo Corporation Quote

Stocks to Consider

Here are some companies which, as per our model, have the right combination of elements to post an earnings beat this quarter:

Century Communities, Inc. CCS , with an Earnings ESP of +14.93% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

FirstEnergy Corp. FE , with an Earnings ESP of +2.56% 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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