Comcast Corp (CMCSA - Free Report) is set to report third-quarter 2019 results on Oct 24.
The Zacks Consensus Estimate for third-quarter 2019 revenues is pegged at $27.07 billion, which indicates growth of almost 22.3% from the year-ago quarter’s reported figure.
However, the consensus mark for earnings has declined by a penny to 75 cents over the past 30 days. Notably, the company beat earnings estimates in the trailing four quarters, the average positive surprise being 7.2%.
In the last reported quarter, Comcast’s adjusted earnings of 78 cents per share outpaced the Zacks Consensus Estimate by 3 cents.
Moreover, revenues increased 23.6% year over year to $26.89 billion but lagged the Zacks Consensus Estimate of $27.19 billion. Notably, Comcast added 209K high-speed Internet customers in second-quarter 2019.
Let’s see how things are shaping up prior to this announcement.
Internet & Mobile Subscriber Base Growth: A Key Catalyst
Comcast’s top line in the to-be-reported quarter is expected to have benefited from an increasing number of high-speed Internet subscribers. The company’s endeavor to improve network capacity has helped it offer higher broadband speed, thereby attracting new subscribers.
Additionally, improving customer experience, owing to expanding Wi-Fi coverage and innovative xFi control features, is expected to have aided subscriber growth.
During the quarter, Comcast launched a new, enhanced WiFi parental control (Xfinity xFi) feature. The new tool automatically pauses network connectivity on a child’s devices once the daily time limit is reached. This ensures establishing healthy limits for Internet usage for the whole family, thereby improving customer experience.
Further, the company bundled the Xfinity Flex offering with an Xfinity Internet-only subscription. This helped both new and existing customers to easily access their favorite streaming services and manage their connected home devices right on the TV.
Notably, Xfinity Flex includes an Internet-connected, 4K UHD streaming TV device, the award-winning Xfinity Voice Remote, a redesigned guide, and more than 10,000 free movies and TV shows.
This move is likely to have attracted more subscribers to Comcast’s Xfinity platform in the to-be-reported quarter.
The Zacks Consensus Estimate for Cable Communication – High Speed Internet revenues is pegged at $4.72 billion, indicating 9.2% growth from the figure reported in the year-ago quarter.
Moreover, the consensus mark for Net Additional Customers: High-Speed Internet Residential stands at 330K compared with 334K reported in the year-ago quarter.
Further, the company’s Xfinity Mobile is now used by more than 1.5 million customers. Strong demand for Buy the Gig Plan and increased uptake of Bring Your Own Device program are expected to have expanded the user base, which is likely to get translated into higher revenues and lower wireless EBITDA losses in the to-be-reported quarter.
The Zacks Consensus Estimate for Cable Communication revenues is pegged at $14.50 billion, implying 5.2% growth from the figure reported in the year-ago quarter.
Sky’s Robust Content to Aid Growth
Meanwhile, Comcast’s expanded international footprint owing to the Sky acquisition is expected to have benefited the top line in the third quarter. Sky’s robust portfolio that comprises original shows like Emmy award winner Chernobyl is likely to have improved subscriber engagement, globally.
In the second quarter, the amount of time Sky customers spent viewing Sky channels grew more than 20% year over year, a trend that most likely continued in the third quarter.
However, a negative impact of price hike (effective from April, in the U.K.) might reflect on the segment’s revenues.
The Zacks Consensus Estimate for Sky revenues is pegged at $4.80 billion, implying a 0.6% decline from the figure reported in the previous quarter.
Moreover, the company continues to lose video subscribers due to cord-cutting and stiff competition from virtual MVPDs. This is expected to reflect on the company’s top line in the third quarter.
Key Q3 Developments
On Sep 17, NBCUniversal unveiled Peacock as the name of its new streaming service, set to launch in April 2020.
On Sep 5, Comcast and LG Electronics USA announced the launch of the Xfinity Stream beta app for 2019, 2018 and 2017 LG Smart TVs.
On Aug 1, Universal Orlando resort announced that it is building the fourth theme park to be called Universal’s Epic Universe.
What Our Model Says
According to the Zacks model, a company with a positive Earnings ESP along with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates.
Comcast has an Earnings ESP of +0.99% and a Zacks Rank #3, which makes us confident about an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Weight Watchers International (WW - Free Report) has an Earnings ESP of +0.64% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shaw Communications (SJR - Free Report) has an Earnings ESP of +3.77% and a Zacks Rank #3.
Viacom (VIAB - Free Report) has an Earnings ESP of +0.22% and a Zacks Rank #3.
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