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What's in Store for Comcast (CMCSA) this Earnings Season?
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Comcast Corp. (CMCSA - Free Report) , the leading cable multi-service operator (MSO) in the U.S., is slated to report first-quarter 2017 results on Apr 27, before the opening bell.
In the trailing four quarters, Comcast’s bottom line matched the Zacks Consensus Estimate in three and surpassed only once in the year-ago quarter. The average beat is 1.25%.
Meanwhile, shares of Comcast Corp. witnessed growth of 3.5% in the past three months, but failed to beat the Zacks categorized Cable TV industry’s increase of 7.6%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Comcast has forayed into the over-the-top video delivery market with the launch of its Internet TV service – Stream. We believe this will help the company check customer churn and provide viewers with more streaming options and flexibility at competitive prices. Further, Comcast’s Cable business is doing well and the NBC Universal segment is witnessing significant improvement.
We believe that these efforts were behind Comcast Corp.’s Business Services segment’s strong momentum and revenue growth in the last reported quarter and we expect to witness the same in the first quarter 2017.
Comcast's decision to venture into the U.S. wireless space bodes well with its diversified business model. The company also expanded its theme park business through the purchase of the remaining 49% stake in Osaka-based Universal Studios Japan (USJ), for $2.3 billion. We believe this should help the company witness revenue growth in its Theme Parks business.
Further, the company continuous efforts to strengthen its foothold in the Internet-of-Things (IoT) space and in the lucrative digital media market through different deals looks good.
However, intensifying competitive threats, consolidation-related woes, lawsuits and their related fines and a highly leveraged balance sheet remain headwinds to the upcoming results of Comcast.
Another major concern for Comcast is its spiraling programming expenses. Operating costs and expenses totaled $14,265 million, surging 10% year over year in the last reported fourth quarter of 2016. We look forward to seeing how far the company succeeds in reducing its expenses in the to-be reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Comcast 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.
Zacks ESP: Comcast has an Earnings ESP of -2.22%. This is because the Most Accurate estimate stands at 44 cents while the Zacks Consensus Estimate is pegged at 45 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Zacks Rank: Comcast has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP 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.
Here are some companies in the Zacks-categorized broader Consumer Discretionary sector — which houses Comcast Corp — that have the right combination of elements to post an earnings beat this quarter.
Charter Communications’ earnings beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 79.71%.
Cinemark Holdings Inc. (CNK - Free Report) is set to release first-quarter 2017 results on May 3. The company has an Earnings ESP of +3.39% and a Zacks Rank #3. Cinemark Holdings’ earnings beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 14.90%.
AMC Networks Inc. (AMCX - Free Report) is set to release first-quarter 2017 results on May 4. The company has an Earnings ESP of +1.02% and a Zacks Rank #1. Its earnings surpassed the Zacks Consensus Estimate only in the last reported quarter.
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What's in Store for Comcast (CMCSA) this Earnings Season?
Comcast Corp. (CMCSA - Free Report) , the leading cable multi-service operator (MSO) in the U.S., is slated to report first-quarter 2017 results on Apr 27, before the opening bell.
In the trailing four quarters, Comcast’s bottom line matched the Zacks Consensus Estimate in three and surpassed only once in the year-ago quarter. The average beat is 1.25%.
Meanwhile, shares of Comcast Corp. witnessed growth of 3.5% in the past three months, but failed to beat the Zacks categorized Cable TV industry’s increase of 7.6%.
Let’s see how things are shaping up for this announcement.
Factors at Play
Comcast has forayed into the over-the-top video delivery market with the launch of its Internet TV service – Stream. We believe this will help the company check customer churn and provide viewers with more streaming options and flexibility at competitive prices. Further, Comcast’s Cable business is doing well and the NBC Universal segment is witnessing significant improvement.
We believe that these efforts were behind Comcast Corp.’s Business Services segment’s strong momentum and revenue growth in the last reported quarter and we expect to witness the same in the first quarter 2017.
Comcast's decision to venture into the U.S. wireless space bodes well with its diversified business model. The company also expanded its theme park business through the purchase of the remaining 49% stake in Osaka-based Universal Studios Japan (USJ), for $2.3 billion. We believe this should help the company witness revenue growth in its Theme Parks business.
Further, the company continuous efforts to strengthen its foothold in the Internet-of-Things (IoT) space and in the lucrative digital media market through different deals looks good.
However, intensifying competitive threats, consolidation-related woes, lawsuits and their related fines and a highly leveraged balance sheet remain headwinds to the upcoming results of Comcast.
Another major concern for Comcast is its spiraling programming expenses. Operating costs and expenses totaled $14,265 million, surging 10% year over year in the last reported fourth quarter of 2016. We look forward to seeing how far the company succeeds in reducing its expenses in the to-be reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Comcast 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.
Zacks ESP: Comcast has an Earnings ESP of -2.22%. This is because the Most Accurate estimate stands at 44 cents while the Zacks Consensus Estimate is pegged at 45 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.
Zacks Rank: Comcast has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP 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.
Comcast Corporation Price and EPS Surprise
Comcast Corporation Price and EPS Surprise | Comcast Corporation Quote
Key Picks
Here are some companies in the Zacks-categorized broader Consumer Discretionary sector — which houses Comcast Corp — that have the right combination of elements to post an earnings beat this quarter.
Charter Communications Inc. (CHTR - Free Report) is slated to release first-quarter 2017 results on May 2. The company has an Earnings ESP of +6.06% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Charter Communications’ earnings beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 79.71%.
Cinemark Holdings Inc. (CNK - Free Report) is set to release first-quarter 2017 results on May 3. The company has an Earnings ESP of +3.39% and a Zacks Rank #3. Cinemark Holdings’ earnings beat the Zacks Consensus Estimate in three of the previous four quarters, with an average positive surprise of 14.90%.
AMC Networks Inc. (AMCX - Free Report) is set to release first-quarter 2017 results on May 4. The company has an Earnings ESP of +1.02% and a Zacks Rank #1. Its earnings surpassed the Zacks Consensus Estimate only in the last reported quarter.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>