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What’s in Store for Liberty Global (LBTYA) in Q4 Earnings?


Liberty Global plc. LBTYA is scheduled to report fourth-quarter 2017 results on Feb 14, after the market closes. The company is a leading cable TV operator in Europe and Latin America.

The Zacks Consensus Estimate for earnings is pegged at a loss of $2.71, indicating a year-over-year decline of 210.6%.

The company has a mixed earnings surprise history. Earnings lagged the Zacks Consensus Estimate in one of the previous four quarters while surpassed it last quarter. It delivered a negative earnings surprise of 95.6%.

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

Factors Likely to Influence Q4 Earnings

Liberty Global continues to grow in the Europe and Central America through several mergers and acquisitions and is looking for more takeover options to expand its footprint. Launch of Telenet Innovation Center will help the company create and test new products focused on new mobile technologies. Liberty Global has launched a new customer-friendly app, Connect App. Apart from the joint venture with Vodafone VOD in Netherlands, launch of DOCSIS 3.1 network services, the long-term agreement with Netflix NFLX, buyout of UTV Ireland TV stations from ITV and the takeover of Cable & Wireless are anticipated to drive growth.

Meanwhile, the company’s share repurchases look encouraging. On Dec 18, 2017, the board of directors approved a $2 billion share repurchase program. Notably, the stock buybacks were supported by the company’s strong balance sheet and cash flow generation. The company is likely to maintain the flexible liquidity scenario in the upcoming quarters.

Further, sale of Swiss and Austrian cable businesses is part of the company’s efforts to restructure business. Liberty Global has inked a deal to sell its Austrian cable business — UPC Austria — to T-Mobile Austria for 1.9 billion euros ($2.2 billion). Several analysts opine that the sale might pave the way for a new $175 billion merger of Liberty Global with Vodafone Group.

Backed by such tailwinds, share price of Liberty Global has rallied 17.7%, outperforming the industry’s growth of 2.0% in the past three months.

However, Liberty Global’s predominant operation in Europe is a major concern because of the prevalence of recessionary pressure, debt crisis and low per capita income in several European countries. Additionally, the markets for video, broadband, fixed-line telephony and mobile services are highly competitive and fast evolving with technological advancements and innovation. Hence, to keep pace with changing dynamics, the company has to bear the related expenses of launching the latest technologies.

Liberty Global’s top line and EBITDA growth might become volatile in the near future, or may be hurt by the maturing Western European operations that account for the majority of the company’s total revenues.

Further, owing to its presence in 14 countries outside the U.S., the company remains exposed to foreign exchange rate risks. Moreover, its recent acquisitions may certainly give rise to integration risks.

Earnings Whispers

Our proven model does not conclusively show that Liberty Global 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: Liberty Global has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of $2.71. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

We caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Liberty Global PLC Price and EPS Surprise

Liberty Global PLC Price and EPS Surprise | Liberty Global PLC Quote

Stock to Consider

AMC Entertainment AMC from the Zacks Consumer Discretionary sector has the right combination of elements to post an earnings beat in fourth-quarter 2017 when it reports on Mar 1. The company has an Earnings ESP of +4.65% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters with an average beat of 120.2%.

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