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Charter Communications (CHTR): Earnings Season Forecast

Charter Communications Inc. CHTR is scheduled to report first-quarter 2016 financial numbers on Apr 28, before the opening bell.

Last quarter, Charter Communications’ loss was wider than the Zacks Consensus Estimate, which led to a negative earnings surprise of 808.33%. Notably, the company’s earnings have missed the Zacks Consensus Estimate in two of the last four quarters, which leads to an average miss of 474.17%.

Let’s see how things are shaping up ahead of this announcement.

Factors Likely to Influence This Quarter

Charter Communications has been aggressively targeting the rapidly developing business services division. Notably, last quarter, the company’s commercial revenues totaled $294 million, up 12.3% year over year. We believe increased investments in this space should boost the company’s top line in the to-be-reported quarter.

Moreover, rollout of several initiatives and continued execution of its core customer growth strategy should result in accelerated residential and commercial customer increase in the quarter.

However, a saturated multi-channel U.S. video market and competition from low-cost online video streaming service providers is likely to weigh on the first-quarter performance.

Earnings Whispers

Our proven model does not conclusively show that Charter Communications 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: Charter Communications has an earnings ESP of -22.55%. This is because the Most Accurate estimate stands at a loss of $1.25 per share while the Zacks Consensus Estimate is pegged at a loss of $1.02.

Zacks Rank: Charter Communications has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Meanwhile, 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 negative estimate revisions.

Stocks to Consider

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

Sprint Corp. S has an earnings ESP of +69.23% and a Zacks Rank #3.

Cogent Communications Holdings, Inc. CCOI has an earnings ESP of +25.00% and a Zacks Rank #3.

Mattersight Corp. MATR has an earnings ESP of +6.67% and a Zacks Rank #3.

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 >>


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
 
SPRINT CORP (S): Free Stock Analysis Report
 
COGENT COMM HLD (CCOI): Free Stock Analysis Report
 
CHARTER COMM-A (CHTR): Free Stock Analysis Report
 
MATTERSIGHT CP (MATR): Free Stock Analysis Report
 
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