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Will Charter Communications (CHTR) Miss Earnings Estimates?


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Charter Communications, Inc. (CHTR - Snapshot Report) is scheduled to report fourth-quarter 2013 financial results before the opening bell on Feb 21, 2014.

In the last quarter, the company delivered a negative 423.81% earnings surprise. Let’s see how things are shaping up for the company prior to the announcement.

Factors to be Considered this Quarter

Charter Communications is striving to acquire Time Warner Cable Inc. In the previous month, the company offered $132.50 per share of Time Warner Cable, including $83 in cash and $49.50 in Charter stock.

However, the board of directors of Time Warner Cable unanimously rejected the offer from Charter on grounds of inadequacy. This is the third rejection in the last one year.  Meanwhile, Comcast provided a more attractive bid of $159 per share of Time Warner Cable. Charter Communications is not expected to raise its bid further for Time Warner Cable. However, Charter Communications may opt for any small cable TV operator.

Earnings Whispers

Our proven model does not conclusively show that Charter Communications 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.

Zero Zacks ESP: This is because both the Most Accurate estimate and the Zacks Consensus Estimate are poised at 21 cents. This leads to an ESP of 0.00% for Charter Communications.

Zacks Rank #5 (Strong Sell): Charter Communications’ Zacks Rank #5 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 #5 lowers the possibility of an earnings surprise.

Other Stocks to Consider

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

Cablevision Systems Corporation (CVC - Snapshot Report) with earnings ESP of +33.33% and Zacks Rank #3 (Hold).

TiVo Inc. (TIVO - Analyst Report) with earnings ESP of +25.0% and Zacks Rank #3.

T-Mobile US, Inc. (TMUS - Snapshot Report) with earnings ESP of +57.14% and Zacks Rank #3.

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