Yahoo Finance A Peek at Charter Communications (CHTR) Earnings Preview - Analyst Blog
Charter Communications Inc. CHTR is scheduled to report its second-quarter 2015 financial numbers before the opening bell on Aug 4.
Last quarter, Charter Communications delivered a mammoth 1142.86% negative earnings surprise. Moreover, the company has delivered negative earnings surprises in all of the last four quarters, which leads to a dismal average miss of 684.79%. Let’s see how things are shaping up ahead of this announcement.
Factors Likely to Influence this Quarter
In May 2015, Charter Communications reached an agreement to buy Time Warner Cable Inc. TWC. The value of the deal stands at $78.7 billion, including debt. The company also announced to take over Bright House for $10.4 billion. If approved, the Time Warner Cable and Bright House deals are likely to benefit Charter by way of geographic expansion and operating cost synergies, which in turn should boost its bottom line and free cash flow, going forward.
Charter Communications also stands to benefit from U.S. cable multi service operators’ (MSOs) dominance in the high-speed broadband (Internet) market. Notably, as of Mar 31, 2015, Charter had 4.153 million video, 4.891 million Internet and 2.481 million voice customers in the residential segment. Also, during the first quarter, the company had gained 125,000 high-speed Internet and 42,000 voice customers.
However, in the event of Charter Communications failing to get the Federal Communications Commission (“FCC”) approval for its impending buyout of Time Warner Cable, it would be rather difficult for the former to survive independently in the highly competitive pay-TV market. Moreover, a saturated multi-channel U.S. video market and competition from low-cost online video streaming service providers might weigh on the second quarter’s performance further.
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, that is not the case here as elaborated below.
Zacks ESP: Charter Communications has an earnings ESP of +25.71%. This is because the Most Accurate estimate stands at 44 cents, whereas the Zacks Consensus Estimate is pegged lower at 35 cents.
Zacks Rank: Charter Communications has a Zacks Rank #5 (Strong Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stock to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ashford Hospitality Trust, Inc. AHT, which has an earnings ESP of +4.35% and a Zacks Rank #1.
The Walt Disney Company DIS, which has an earnings ESP of +2.16% and a Zacks Rank #3.
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DISNEY WALT (DIS): Free Stock Analysis Report
CHARTER COMM-A (CHTR): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
ASHFORD HOSPTLY (AHT): Free Stock Analysis Report
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