A leading cable operator in Europe, Latin America and Australia – Liberty Global Inc. (LBTYA) – is set to release second-quarter 2013 results after the market closes on Aug 1, 2013.
In the last quarter, the company delivered a 100.00% negative earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Going forward, we believe Liberty Global’s revenues will continue to benefit from a ‘triple play’ of video, broadband, and telephone, as it signs up more “bundled” customers in Europe and Latin America. Moreover, the acquisition of British cable MSO, Virgin Media, makes Liberty Global the world's largest cable TV MSO (multi service operator), with nearly 25 million subscribers.
However, intense competition in the pay-TV market coupled with a highly leveraged balance sheet may act as headwinds for the company, going forward. Moreover, business integration risk persists as the company has recently acquired several companies either partially or fully.
Our proven model does not conclusively show that Liberty Global is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Negative Zacks ESP: This is because the Most Accurate estimate is 17 cents while the Zacks Consensus Estimate is higher at 30 cents. This leads to an ESP of -43.33% for Liberty Global.
Zacks Rank #3 (Hold): Liberty Global’s Zacks Rank #3, decreases the predictive power of ESP.
We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of -43.33% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.
Other Stocks to Consider
Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.
CBS Corporation (CBS) has Earnings ESP of +1.39% and carries a Zacks Rank #2 (Buy).
Time Warner Cable Inc. (TWC) has Earnings ESP of +1.21% and carries a Zacks Rank #3 (Hold).
DIRECTV (DTV) has Earnings ESP of +0.78% and carries a Zacks Rank #3 (Hold).
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