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Factors to Consider Ahead of Comcast's (CMCSA) Q1 Earnings

Aniruddha Ganguly

Comcast CMCSA is set to report first-quarter 2019 results on Apr 25.

In the trailing four quarters, the company delivered average positive earnings surprise of 5.4%, beating estimates in each. In the last reported quarter, the company’s adjusted earnings of 64 cents per share outpaced the Zacks Consensus Estimate by couple of cents.

Moreover, revenues rallied 26.1% year over year to $27.85 billion and beat the Zacks Consensus Estimate of $25.74 billion. Notably, Comcast added 323K net new residential broadband customers in fourth-quarter 2018.

The Zacks Consensus Estimate for first-quarter 2019 revenues is pegged at $27.31 billion, which indicates growth of almost 19.8% from the year-ago quarter’s reported figure. Moreover, the consensus mark for earnings has increased 4.8% to 66 cents over the past 30 days.
 

Comcast Corporation Price and EPS Surprise

Comcast Corporation Price and EPS Surprise | Comcast Corporation Quote

 

Let’s see how things are shaping up prior to this announcement.

Growth in Internet Subscriber Base: Key Catalyst

Comcast’s top line in the to-be-reported quarter is expected to benefit from an increasing number of high-speed Internet subscribers. The company’s endeavor to improve network capacity has helped it offer higher broadband speed, attracting new subscribers.

Moreover, expanding Wi-Fi coverage and innovative xFi control features are improving customer experience.

The Zacks Consensus Estimate for Cable Communication – High Speed Internet revenues is pegged at $4.56 billion. Moreover, the consensus mark for Net Additional Customers: High-Speed Internet Residential stands at 340K.

Further, the company’s Xfinity Mobile is now used by 1.2 million customers. Per Comcast, the addition of mobile service improves broadband retention rate. Notably, beginning first-quarter 2019, the company will report Xfinity Mobile revenues as part of the Cable segment.

The Zacks Consensus Estimate for Cable Communication is pegged at $14.09 billion, implying 4.2% growth from the figure reported in the year-ago quarter.

Moreover, NBC Universal’s strong content portfolio is likely to drive growth. Additionally, Comcast’s expanded international footprint due to Sky acquisition is a tailwind.

However, the company continues to lose video subscribers due to cord-cutting and stiff competition from virtual MVPDs. This is expected to hurt top-line growth.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Comcast has a Zacks Rank #2 and an Earnings ESP of +4.90%. 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 earnings beat in their upcoming releases:

Electronic Arts EA has an Earnings ESP of +15.98% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Charter Communications CHTR has a Zacks Rank #3 and an Earnings ESP of +5.33%.

Take-Two Interactive TTWO has an Earnings ESP of +7.94% and a Zacks Rank #3.

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