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Time Warner Cable Inc. (TWC - Analyst Report) is scheduled to report its second-quarter 2014 results before the opening bell on July 31.

Last quarter, the company posted a positive earnings surprise of 6.0%. Moreover, the company has surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 4.2%. Let’s see how things are shaping up prior to this announcement.

Factors to Consider This Quarter

Time Warner Cable is persistently losing video customers despite implementing several strategies. Barring Time Warner Cable, almost all cable and satellite TV operators have gained video subscribers in the previous quarter. Even Dish Network reported video subscriber additions after witnessing video customer losses for 26 straight quarters.

To add to the cable company’s woes, large telecom players like AT&T (T - Analyst Report) and Verizon Wireless continue to gain video subscribers, thereby offering stiff competition. Moreover, low-cost video streaming services offered by companies like Netflix and Hulu will further affect the company’s subscriber growth.

Earnings Whispers?

Our proven model does not conclusively show that Time Warner Cable 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, that is not the case here as elaborated below.

Negative Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -3.6% for Time Warner Cable. This is because the Most Accurate estimate stands at $1.86 while the Zacks Consensus Estimate is higher at $1.93. 

Zacks Rank: Time Warner Cable has a Zacks Rank #3 (Hold) which when combined with ESP of -3.6% makes surprise prediction difficult.

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

Other Stocks to Consider

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

TIM Participacoes S.A. (TSU - Snapshot Report), with earnings ESP of +16.7% and a Zacks Rank #1.

Time Warner Inc. (TWX - Analyst Report), with earnings ESP of +1.2% and a Zacks Rank #3.

ViaSat Inc. (VSAT - Snapshot Report), with earnings ESP of +375% and a Zacks Rank #3.

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