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Will Comcast Deliver Another Bullish Earnings Beat

 February 12, 2013 02:56 PM

(By Rich Bieglmeier) Comcast Corporation (CMCSA) will host a conference call with the financial community to discuss financial results for the fourth quarter and full year 2012 on Wednesday, February 13, 2013 at 8:30 a.m. Eastern Time (ET). Comcast will issue a press release reporting its results earlier that morning. Wall Street anticipates that CMCSA will earn $0.53 for the quarter. iStock expects the voice, data, and cable TV company to report earnings that will beat Wall Street's consensus number. The iEstimate is $0.54, a $0.01 upside surprise.

Comcast Corporation provides entertainment, information, and communications products and services in the United States and internationally. The company's Cable Communications segment offers video, high-speed Internet, and voice services to residential and business customers. As of December 31, 2011, it served 22.3 million video customers, 18.1 million high-speed Internet customers, and 9.3 million voice customers in 39 states and the District of Columbia. The company's Broadcast Television segment comprises the NBC and Telemundo broadcast networks, and the Filmed Entertainment segment consists of the operations of Universal Pictures, including Focus Features.

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The NASDAQ 100 member has managed earnings well during the last four years. Profits per share managed to top Wall Street's estimates 14 of the last 16 quarters, missed expectations once, and hit the target once. EPS bypassed the consensus number by an average of 9.43% with a range of 2.44% to $26.92 for the 14 bullish surprises. Earnings missed by 17.50% for the bearish shortfall.

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While earnings beats have been relatively predictable, the stock price's performance in the days surrounding earnings has been mixed. Nine of the 16 quarterly checkups rewarded shareholders with an average gain of 6.87%, and a range of 0.8% to 18.10%. The unlucky seven dips reduced the stock price by an average of 5.43% with a range of -2.10% to -14.90%.

According to USA Today, Comcast's NBC's ratings have tanked. The paper says, "The network, riding high last fall with Sunday Night Football and The Voice, is now back in the ratings cellar.

With both shows off the schedule, the network has gone from first back to worst again among the young-adult audience it sells to advertisers. And its stable of replacement scripted programming has been DOA."

However, Spanish language Telemundo ratings have been setting records. TVbythenumbers.com said, "Telemundo continues to be the fastest growing broadcast network, regardless of language, in Monday through Sunday primetime and the only Spanish-language broadcast network with growth versus last season, posting a 13 percent increase, according to Nielsen" heading into the second half of 2012.

The NBCUniversal segment, which includes Telemundo, NBC, and Universal studios, accounts for roughly 41.2% of revenues in the last quarter. Based on Telemundo's performance, iStock would expect this division to deliver growth once again; however, we feel the pace will slow thanks to NBC's ratings decline.

The Cable Communications Segment includes voice, data, and video generates the other 60% of the entertainment company's revenue. XFinity is Comcast's lead product in this division. Looking at Google Trends for Q4 2012 relative to Q4 2011 for the keyword "XFinity" looks strong year-over-year, up 64%. Last year, the company earned $0.47 for the fourth quarter. Search queries "XFinity" for October – December were flat compared to Q3 2012 when profits came in at $0.46 per share.

We are a little concerned that the number of new subscribers might not live up to expectations as searches for "XFinity Log in" are down 16% quarter-over-quarter (QoQ). It's been our experience that "log in" is most likely a term used by new users/subscribers as they are unfamiliar with a site's hierarchy. YoY numbers look better with an increase of 72%.

Overall, Comcast Corporation (CMCSA) is likely to deliver another small upside surprise based on its history. Viewership strength for Telemundo and XFinity holding steady compared to Q3, according to Google Trends, should provide enough punch for CMCSA to meet or exceed the iEstimate.


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