TiVo (TIVO) to Report Q4 Earnings: Will it Surprise Estimates?
TiVo Inc. TIVO is set to report fourth-quarter fiscal 2016 results on Mar 1. Last quarter, the company posted a positive earnings surprise of 25.00%. Notably, TiVo has outperformed the Zacks Consensus Estimate thrice in the last four quarters with an average positive surprise of 28.57%.
Let us see how things are shaping up for this announcement.
Factors to Consider
We remain optimistic about TiVo’s prospects on the back of its sustained focus on product innovations and subscriber acquisition. Further, higher number of distribution deals with cable companies will support the company’s expansion plans and strengthen the customer base, thereby aiding fiscal fourth-quarter revenues.
TiVo has significant growth opportunities in Western Europe and Latin America, in our view, given the partnerships with local providers. The company’s strong balance sheet will also enable it to pursue strategic acquisitions and aggressive share buyback programs, thereby boosting results in the to-be-reported quarter.
However, intensifying competition from cable and satellite providers, who offer bundled up DVR service with digital cable in one set-top box at comparable monthly subscription rates with no upfront costs. It faces significant competition from a number of companies, which have created competing DVR technologies and offer attractive licensing agreements to service providers and manufacturers of DVRs, thereby leaving little to no scope for differentiation.
The company is also facing significant competition from Google TV, Roku and Apple AAPL TV. As a result, TiVo has been increasing its research and development (R&D) investments to stay ahead of competition, but at the cost of near-term profitability.
Earnings Whispers
Our proven model does not conclusively show that TiVo will beat earnings 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. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for TiVo is 0.00%. This is because the Most Accurate estimate of 6 cents per share is in line with the Zacks Consensus Estimate.
Zacks Rank: TiVo’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.
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 momentum.
Stocks to Consider
Here are a couple of stocks, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Zumiez Inc. ZUMZ, with an Earnings ESP of +2.08% and a Zacks Rank #2.
The Kroger Co. KR, with an Earnings ESP of +1.85% and a Zacks Rank #2.
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TIVO INC (TIVO): Free Stock Analysis Report
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KROGER CO (KR): Free Stock Analysis Report
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