CHICAGO, Feb. 27, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Comcast Corp. (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC), DIRECTV (Nasdaq: DTV), DISH Network Corporation (Nasdaq: DISH) and Delta Air Lines (NYSE: DAL).
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Here are highlights from Friday's Analyst Blog:
Earnings Scorecard: Comcast
Comcast Corp. (Nasdaq: CMCSA) reported excellent financial results in the fourth quarter of 2011, easily outpacing the Zacks Consensus Estimates. While the company's Cable businesses continued to beat market expectations, NBC Universal has started providing synergies.
Moreover, Comcast impressively narrowed its subscriber loss to 17,000 compared with a loss of 135,000 subscribers in the year-ago quarter, which we believe had a positive impact on the company's performance in the reported quarter.
Fourth Quarter Highlights
In the reported quarter, quarterly EPS of 47 cents beat the Zacks Consensus Estimate of 43 cents. GAAP net income for the fourth quarter of 2011 was $1,287 million or 47 cents per share compared with a net income of $1,018 million or 36 cents per share in the prior-year quarter.
Total revenue in the reported quarter came in at $15,042 million, up 54.7 % year over year and higher than the Zacks Consensus Estimate of $14,809 million. Both Cable Communications and NBC Universal segments generated solid revenue growth. Operating margin in the fourth quarter of 2011 was 19.4% compared with 20.7% in the prior-year quarter.
Agreements of Analysts
Of the 15 analysts covering the stock in the last 7 days, none revised upward for the first quarter of 2012, while one analyst revised downward for the same period. Similarly, for the second quarter of 2012, out of the 14 analysts covering the stock, one analyst upwardly revised, while another moved downward.
For fiscal 2012, out of the 21 analysts, two analysts raised the estimates but three slashed the same. Likewise, for fiscal 2013, out of 19 analysts, three analysts revised the estimates upward, while one moved in the opposite direction.
Currently, the Zacks Consensus EPS Estimate for the first quarter of 2012 is pegged at 42 cents per share. The projected annual growth rate is 16.7%. Similarly, for the second quarter of 2012, the current Zacks Consensus EPS Estimate of 49 cents per share indicates a year-over-year gain of 15.48%.
Magnitude of Estimate Revisions
During the last 7 days, for the first and second quarter of 2012, the current Zacks Consensus Estimate was at par with the previous estimate of 42 cents and 49 cents, respectively.
Again for fiscal 2012, in the last 7 days, the current estimate was in line with the previous Zacks Consensus Estimate of $1.88. However, for fiscal 2013, the current Zacks Consensus Estimate increased from $2.19 to $2.20.
Earnings Surprises
Comcast produced an earnings surprise of 5 cents or 11.90% in the last quarter. The ongoing quarter reflects an upside potential of 2.38% but the upcoming quarter contains a downside risk of 2.04%.
For fiscal 2012, the growth potential of EPS for Comcast remains at 0.00%. However, for fiscal 2013, the downside potential is 0.46%.
Our Recommendation
We believe that continuous share repurchase plan, better churn rate and innovative product offering strategies will drive the company's stock upward going forward. Moreover, Comcast is also aggressively deploying the DOCSIS 3.0 (also called Wideband) technology to upgrade its existing customers to high-speed network together with all digital networks.
However, higher operating expenses coupled with stiff competition from formidable rivals like Time Warner Cable (NYSE: TWC) and other satellite operators like DIRECTV (Nasdaq: DTV) and DISH Network Corporation (Nasdaq: DISH) will affect profitability going forward. Moreover, huge debt, higher operating expense coupled with continuous loss of video subscribers will affect its bottom-line growth.
We maintain our long-term Neutral recommendation on Comcast. Currently, Comcast has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
Delta Spreads Wings in China
Delta Air Lines (NYSE: DAL) has recently entered into a partnership with China Eastern and China Southern airlines. The agreement will allow code sharing between Delta and both the Chinese airlines to serve more flights to customers.
Per the agreement, both the Chinese carriers will place their codes and flight numbers on Delta flights operated between Seattle and Beijing. Additionally, China Eastern can access Delta carriers flying between Detroit and Beijing.
In exchange, Delta can expand into the China market by accessing China Eastern flights on the New York and Los Angeles to Shanghai route as well as China Southern flights between Los Angeles and the Guangzhou network.
Delta Air Lines continues with its effort to expand domestic and international flights through various partnerships. We believe that the new deal will attract new alliances and expand Delta's network in China, thereby adding revenue streams from one of the world's fastest growing travel markets.
China is expected to be the biggest contributor to global air traveler through 2014. We believe the company's global network, hub structure and alliances with other airlines enable it to offer customers an improved global reach compared with other domestic and international airlines.
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