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What's in Store for Comcast (CMCSA) This Earnings Season?

Comcast Corporation CMCSA, a leading cable MSO (multi service operator) in the U.S., is scheduled to release its first-quarter 2016 results on Apr 27, before the market opens.

Last quarter, Comcast delivered a negative earnings surprise of 1.22%. Moreover, the company’s earnings have surpassed the Zacks Consensus Estimate in one of the last four quarters, with an average beat of 1.39%. Let’s see how things are shaping up for this announcement.


Factors Likely to Influence This Quarter

NBCUniversal, the wholly owned media company of Comcast, launched of a new data-driven ad-targeting division called ‘Audience Studio.’ The division enables marketers with a data-driven ad-targeting solution, which can be deployed across various television and social media, to reach the intended audience. Burgeoning demand for data, induced by increasing penetration of smart phones and tablets, is likely to drive ad revenues.

Comcast started providing direct connection to Amazon.com Inc.’s AMZN Web Service (AWS) to help its enterprise customers. The AWS partnership provides Comcast’s customers private network connectivity to AWS Cloud services that perform critical business processes like production computation and storage, backup, dev/test, collaboration, and billing or website hosting. The business service division is one of the fastest growing divisions at Comcast with the ability will diversify the company’s business operations and create a stable revenue stream, going 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as elaborated below.

Zacks ESP: Comcast has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 79 cents.

Zacks Rank: Comcast has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes earnings prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are a couple of companies that you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Sprint Corp. S, with an Earnings ESP of +69.23% and a Zacks Rank #3.

Level 3 Communications, Inc. LVLT with an Earnings ESP of +2.22% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
COMCAST CORP A (CMCSA): Free Stock Analysis Report
 
AMAZON.COM INC (AMZN): Free Stock Analysis Report
 
SPRINT CORP (S): Free Stock Analysis Report
 
LEVEL 3 COMM (LVLT): Free Stock Analysis Report
 
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