Will Comcast (CMCSA) Miss Earnings Estimates This Quarter? - Analyst Blog

Comcast Corporation CMCSA is scheduled to report its first-quarter 2014 financial results before the opening bell on April 22, 2014.

Last quarter, the company delivered a 2.9% negative earnings surprise. Let's see how things are shaping up for this announcement.

Factors to be Considered this Quarter

The company's Cable business continues to perform well and the NBC Universal segment is witnessing improvement. Moreover, launch of innovative services have resulted in video subscriber additions in the previous quarter, after a gap of 26 quarters.

Recently, Comcast struck a deal with video streaming company, Netflix. Per the deal, Comcast will deliver the latter's content directly to the Netflix customers without affecting the video quality. The company also formed a strategic partnership with Skype for high-definition video chat from TV sets, using a special hardware kit provided by the company. The customers of Comcast will be able to make calls and send instant messages through Skype while watching TV. The TV video-calling service will generate a new monthly revenue stream for Comcast.

However, the U.S. pay-TV market is reaching saturation level. Moreover, stiff competition from large carriers and other low-cost video streaming companies coupled with mounting programming costs and debt levels may act as headwinds for the company moving ahead.

Earnings Whispers

Our proven model does not conclusively show that Comcast 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, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -1.56% for Comcast as the Most Accurate estimate stands at 63 cents while the Zacks Consensus Estimate is higher at 64 cents.

Zacks Rank: Comcast currently carries a Zacks Rank #3 (Hold). We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

We caution investors against the stock going into the earnings announcement, as a combination of an Earnings ESP of -1.56% and a Zacks Rank #3 lowers the possibility of an earnings surprise.

Other Stocks to Consider

Here are some companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Dish Network Corp. DISH with earnings ESP of +4.65% and Zacks Rank #3.

Time Warner Cable Inc. TWC with earnings ESP of +0.60% and Zacks Rank #3.

TiVo Inc. TIVO with earnings ESP of +33.33% and Zacks Rank #3.