DIRECTV: Will It Beat Earnings? - Analyst Blog
May 03 2013 - 11:30AM
Zacks
The largest satellite TV provider
in the U.S., DIRECTV (DTV) is set to release its
first-quarter 2013 results before the opening bell on May 7,
2013.
In the last quarter, the company
delivered a 33.62% positive earnings surprise. Let’s see how things
are shaping up for this announcement.
Factors to be Considered
this Quarter
We believe that a maturing Pay-TV
market in the U.S. coupled with tough competition from cable MSO’s
(multi service operator) remain the biggest challenge for DIRECTV.
Apart from the MSO’s, the large telecom carriers are also reducing
its market share by offering fibre-based TV and other high-speed
broadband services. Additionally, DIRECTV is significantly lagging
in providing services like streaming facilities and has been losing
market share to mainstream pay-TV service
providers.
However, the company has taken some
strategic steps to streamline its cost structure through better
negotiation with the content providers and focusing more on
becoming a premium brand in the U.S., targeting the high-end
customers. These steps are expected to bring some respite for
DIRECTV in the coming quarter.
Earnings
Whispers
Our proven model does not
conclusively show that DIRECTV is likely to beat the Zacks
Consensus Estimate this quarter. That is because a stock needs to
have both a positive Expected Surprise Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong
Buy) or #2 (Buy) or #3 (Hold) for this to happen. Unfortunately,
this is not the case here as elaborated below.
Zacks ESP: This is
because the Most Accurate estimate is $1.05 but the Zacks Consensus
Estimate stands at $1.06. This leads to an ESP of -0.94% for
DIRECTV.
Zacks Rank #3
(Hold): However, DIRECTV’s Zacks Rank #3 increases the
predictive power of ESP.
We caution investors against the
stock going into the earnings announcement, as a Zacks earnings ESP
of -0.94% combined with a Zacks Rank #3 lowers the possibility of
an earnings surprise.
Other Stocks to
Consider
Here are some other companies to
consider as our model shows they have the right combination of
elements to post an earnings beat this quarter:
Research in Motion
Limited (BBRY) has Earnings ESP of +200.00% and carries a
Zacks Rank #2 (Buy).
Telus Corp (TU)
has an Earnings ESP of +3.77% and carries a Zacks Rank #3
(Hold).
Dish Networks
Corp. (DISH) has an Earnings ESP of +1.89% and carries a
Zacks Rank #3 (Hold).
RESEARCH IN MOT (BBRY): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
TELUS CORP (TU): Free Stock Analysis Report
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