We may not want to spend $12 to sit and watch the latest Hollywood flick in a movie theater while snacking on overpriced popcorn, but we seem to be willing to sit down in front of our own television sets at home and watch a movie or hot new series there with some microwave popcorn. That may be one reason why Liberty Media Corp. (LMCA) is the final company selected by the StarMine research analysts as being likely to significantly outperform analysts’ estimates when it reports its earnings March 9, 2012, given the fact that it currently has a large positive Predicted Surprise of 25.3%.
Liberty Media owns a stake in Barnes & Noble, as well as interests in multiple other media and entertainment companies, including the Starz movie channels, offered as premium content by many cable companies, and SiriusXM, the subscription-based premium radio networks. While the public has been reluctant to go out in search of their entertainment (as we discussed in this article on Regal Entertainment), Liberty Media is benefitting from their tendency to linger at home and spend some of their dollars on premium channels like StarZ.
Since Liberty Media reported third quarter earnings November 8, 2011, the SmartEstimate (represented by the blue line in the chart below) has seen a marked uptick: it has moved from signaling that analysts expect the company to report a loss, to forecasting a profit of 14 cents a share. In the same period, the I/B/E/S consensus (represented by the gold line) also rose, hitting 11 cents a share. But that consensus still falls 4 cents a share short of the SmartEstimate, a large differential leading us to believe that the company may report an upside earnings for the just-ended quarter. Of the seven analysts who follow the stock, four have raised their estimates recently, while only two have lowered them. Moreover, the highest-rated of those analysts (as rated by StarMine) recently boosted his estimate to 29 cents a share.
Those bullish analysts believe that Starz will be the primary driver of Liberty Media’s earnings. Liberty Media now has a Starmine Analyst Revisions Model (ARM) score of 98, indicating that analysts are likely to continue to revise estimates higher still and making it seem as if the company is well positioned to beat estimates in the fourth quarter.
Liberty Media is the final selection of the StarMine research time, which has selected a total of ten companies to highlight: five whose earnings are expected to lag the consensus and another five which are expected to beat those estimates handily when they report their results during the just-launched earnings season. Stay tuned: in the days and weeks leading up to Asia’s earnings season, the same research team will be back to highlight a selection of Asian companies expected to beat and miss profit estimates.
Please note: This article was originally published on January 13, 2012 and updated with changes on January 31, 2012.
SMARTESTIMATES AND THE PREDICTED SURPRISE %
SmartEstimates: StarMine Professional quantitatively analyzes the earnings estimate accuracy of sell-side analysts and uses this information to create proprietary
SmartEstimates®. SmartEstimates help you better predict future earnings and analyst revisions with estimates that place more weight on recent forecasts by top-rated analysts.
Predicted Surprise %: The Predicted Surprise% is the percentage difference between the SmartEstimate and the I/B/E/S consensus estimate. When SmartEstimates diverge significantly from consensus, it serves as a leading indicator of the direction of future revisions and/or surprises. In aggregate, this indicator gets earnings surprises directionally correct 70% of the time.
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