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Cable TV Stocks' Q2 Earnings to Watch on Jul 20: RCI, DISH

Zacks Equity Research

As per the Zacks Industry categorization, the Cable Television industry falls under the broader Consumer Discretionary sector, which is one of the 16 Zacks sectors.

The cable television industry, being one of the important industries in the U.S., has been losing customers to wireless telecom operators as well as online streaming service providers. Notably, the existing saturation and competition of the multi-channel U.S. video market has led to this loss. Online video streaming service providers such as Netflix, Hulu.com, YouTube etc., pose severe threat to cable TV operators due to cheap source of TV programming.

In order to cope up with the loss and remain competitive in the market, pay-TV operators have started offering internet TV services with selected TV channels at cheaper rates. Moreover, two of major cable multi service operators (MSOs) in U.S., Comcast Corp. CMCSA and Charter Communications Inc. CHTR, are planning to enter the domestic wireless industry.

With such mixed prospects and strategic business ideas, let’s have a look at the price performance of the cable television industry when compared with the S&P 500 index. The cable television industry has gained 18.72% outperforming the S&P 500’s gain of 13.7%, over the past one year.

Some of the major cable television companies, which are scheduled to release their second-quarter 2017 earnings, are Comcast Corp., Charter Communications, Shaw Communications Inc. SJR and Liberty Global plc. LBTYA.

On Jun 28, Shaw Communications reported an impressive financial result for the third quarter of fiscal 2017 (ended May 31, 2017) wherein the bottom line and top line surpassed the Zacks Consensus Estimate.

Comcast Corp. and Charter Communications will report their results on Jul 27, before the market opens. Liberty Global plans to release its numbers on Aug 7, after the market closes. We look forward to see how these cable companies, which are yet to release their quarterly earnings, will perform.

An Overview of Q2 Earnings So Far

We have just entered the second-quarter earnings season with results from 30 S&P 500 members that account for 9.3% of the index’s total market capitalization (based on our latest Earnings Preview article). Total earnings for these companies are up 13.8% from the year-ago period on 6% higher revenues, with 83.3% beating EPS estimates and a similar portion beating revenue estimates.

This week will see more than 200 companies reporting results, including 68 S&P 500 members. We can state that the second-quarter earnings season is off to a good start. By the end of this week, we will have results from almost one-fifth of the S&P 500 members.

Q2 Expectations (as a whole & sector specific)

For second-quarter, we anticipate the prospects of companies to improve steadily. In fact, our latest scorecard projects that total Q2 earnings are expected to be up 6.6% from the year-ago period on 4.5% higher revenues. This would follow 13.3% increase in earnings growth from first quarter on 7.0% revenues growth, recording the highest increase in almost two years.

We predict that second-quarter earnings of the Consumer Discretionary space to be down 1.6% in the quarter on 7.8% higher revenues in the year-ago period.

Cable TV Stocks’ Expected Q2 Earnings Release on Jul 20

Our quantitative model offers some insight into stocks that are about to report their earnings. Per the model,  a stock needs to have the right combination of the two key ingredients, a positive Earnings ESP and a Zacks Rank #3 (Hold) or better, to deliver earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Meanwhile, we also caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Investors interested in cable TV stocks can watch out for the two cable companies that are expected to report their second-quarter 2017 numbers, before the opening bell on Jul 20.

Headquartered in Canada, Rogers Communications Inc. RCI is one of the largest integrated telecom operator in the region. The company has become the first wireless operator in Canada to offer Internet of Things (IoT) as a service to business enterprises. End-to-End Incident Management, Farm & Food Monitoring and Level Monitoring are the three IoT services that the wireless carrier currently offers.

The company has an Earnings ESP of +1.41% because the Most Accurate estimate stands at 72 cents, higher than the Zacks Consensus Estimate of 71 cents. A favorable Earnings ESP indicates a positive earnings surprise.

Rogers Communication, Inc. Price and EPS Surprise


Rogers Communication, Inc. Price and EPS Surprise | Rogers Communication, Inc. Quote

Currently, Rogers Communications has a Zacks Rank #2 (Buy), which increases the predictive power of the ESP. You can seethe complete list of today’s Zacks #1 Rank  stocks here.

Hence, a positive Earnings ESP along with a Zacks Rank #2, makes us confident of an earnings beat. (read more: Rogers Communications Q2 Earnings: A Beat in Store?).

DISH Network Corp. DISH, the second largest satellite TV operator in the U.S., is expected to report financial numbers on Jul 20.

In the last-reported quarter, DISH Network delivered a positive earnings surprise of 13.43%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 7.79%.

The company has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP (both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 75 cents) makes surprise prediction difficult (read more: DISH Network Q2 Earnings: Is a Surprise in Store?).

DISH Network Corporation Price and EPS Surprise


DISH Network Corporation Price and EPS Surprise | DISH Network Corporation Quote

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Shaw Communications Inc. (SJR) : Free Stock Analysis Report
DISH Network Corporation (DISH) : Free Stock Analysis Report
Liberty Global PLC (LBTYA) : Free Stock Analysis Report
Rogers Communication, Inc. (RCI) : Free Stock Analysis Report
Comcast Corporation (CMCSA) : Free Stock Analysis Report
Charter Communications, Inc. (CHTR) : Free Stock Analysis Report
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