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Analyst Blog

Liberty Interactive Corporation is slated to report its fourth-quarter 2013 financial results before the opening bell on Feb 28, 2014.

In the last quarter, the company’s earnings came in line with the Zacks Consensus Estimate. Let’s see whether the situation has changed in the fourth quarter.

Factors to be Considered this Quarter

Liberty Interactive’s QVC division is benefiting from the surge in online sales. Management stated that its online sales will constitute more than 50% of the total revenue in the U.S. by 2014. Exposure to international markets, such as Japan, Germany, Italy, and the U.K., will enable QVC to achieve a high rate of growth. QVC is gradually foraying into these developed markets.

However, the major concern for Liberty Interactive is the fluctuating growth rate of its QVC segment in the last four quarters. This segment currently generates approximately 85% of the company’s total revenue and 100% of the operating profit. Thus, any interruption in the revenue stream of QVC will significantly affect the company’s overall financials.

Earnings Whispers

Our proven model does not conclusively show that Liberty Interactive 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, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of +9.30% for Liberty Interactive as the Most Accurate estimate stands at $0.47 while the Zacks Consensus Estimate is lower at $0.43.

Zacks Rank: Liberty Interactive’s Zacks Rank #4 (Sell) decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks earnings ESP of +1.14% combined with a Zacks Rank #4 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.

GrupoTelevisa, S.A.B. (TV - Analyst Report) with earnings ESP of +10.53% and Zacks Rank #3 (Hold).

BlackBerry Limited (BBRY - Analyst Report) with earnings ESP of +3.57% and Zacks Rank #3.

NII Holdings Inc. with earnings ESP of +17.71% and Zacks Rank #3.

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