Time Warner Cable Raises Dividend - Analyst Blog
February 01 2013 - 10:10AM
Zacks
Yesterday, the Board of Directors
of Time Warner Cable Inc. (TWC) decided to hike
its regular quarterly dividend from 56 cents per share to 65 cents
per share, a significant jump of 16%. The revised quarterly cash
dividend will be payable on Mar 15, 2013 to stockholders of record
at the close of business on Feb 28, 2013. In the last three years,
the company is systematically enhancing its shareholders’ wealth
either through a share repurchase program or by increasing dividend
rate.
Time Warner Cable reported mixed
financial results for the fourth quarter of 2012. Although net
earnings surpassed the Zacks Consensus Estimate, revenue fell below
the same. Nevertheless, the company demonstrated an impressive
annualized progress primarily attributable to: (1) new acquisitions
of NewWave, NeviSite, and Insight, which have enhanced the
company’s financials. As a result, the growth rate of revenue
exceeds the growth rate of operating costs (2) steadily growing
demands for residential high-speed Internet services (3)
exceptionally solid performance by its Business Services segment,
and (4) growing political advertisements.
Despite these positives, Time
Warner Cable has given a lukewarm outlook for fiscal 2013. Adjusted
earnings per share for fiscal 2013 are expected to be in the range
of $6.33–$6.6, up about 10–15%. This guidance is far below the
current Zacks Consensus Estimate of $6.90. Consequently, the stock
price of Time Warner Cable fell $11.36 (11.28%) yesterday. This was
the company’s highest stock price fall in nearly four years.
Management cited that rising programming costs, especially
for sports channels and an expected dip in political advertisement
are the primary reasons for this weak forecast.
Under this scenario, a hike in
dividend may strengthen the stock price. Time Warner Cable
currently has a Zacks Rank #3 (Hold). Other major pay-TV service
providers include Comcast Corp. (CMCSA),
DIRECTV Inc. (DTV) and DISH Network
Corp. (DISH). All these three stock currently have a Zacks
Rank #3 (Hold). Comcast and DIRECTV will dealer their
fourth-quarter 2012 financial results on Feb 13 and 14
respectively, while DISH is yet to declare its fourth-quarter 2012
earnings date.
COMCAST CORP A (CMCSA): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
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