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Is Liberty Global (LBTYA) Poised to Beat Earnings Estimates?

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Liberty Global Inc. (LBTYA - Analyst Report) is set to release its fourth-quarter fiscal 2013 results after the opening bell on Feb 13, 2014.

In the last quarter, the company delivered a negative 80.43% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered This Quarter

Liberty Global’s revenues will continue to benefit from a ‘triple play’ of video, broadband and telephone, as it signs up more “bundled” customers in Europe and Latin America. Liberty Global recently launched a hybrid IP video gateway called “Horizon TV” in five countries.

The new web-based hybrid modem includes an open software developer platform and application store. Such value-added services will continue to drive subscriber growth for the company.

On the flip side, Liberty Global’s continuous acquisitions may lead to integration risks and a highly leveraged balance sheet. The company predominantly operates in Europe, which at present is economically the most vulnerable. Ongoing debt crisis in several European countries may significantly affect the future prospect of Liberty Global.

Several European broadband service providers are gradually deploying high-speed DSL and Fiber-to-the-Home networks, making the industry extremely competitive. In addition, we expect more cash-strapped consumers to downsize existing services, resulting in subscriber loss.

Earnings Whispers

Our proven model does not conclusively show that Liberty Global is likely to beat the Zacks Consensus Estimate this quarter. 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. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are poised at 38 cents. Hence, the ESP is 0.00%.

Zacks Rank #3 (Hold): Liberty Global’s Zacks Rank #3 decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of 0.00% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise for Liberty Global.

Other Stocks to Consider

Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.

TiVo Inc. (TIVO - Analyst Report) has Earnings ESP of +25.00% and carries a Zacks Rank #3.

Shaw Communications Inc. (SJR - Analyst Report) has Earnings ESP of +2.63% and carries a Zacks Rank #3.

DIRECTV (DTV - Analyst Report) has Earnings ESP of +1.56% and carries a Zacks Rank #3.

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