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Can Time Warner Cable’s Revenue Improve in 1Q16?

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Time Warner Cable’s revenue in 1Q16

In the first part of this series, we looked at growth expectations of Wall Street analysts for Time Warner Cable’s (TWC) 1Q16 earnings. Wall Street anticipates TWC’s year-over-year (or YoY) growth momentum to increase in 1Q16 compared to 4Q15. According to the consensus of Wall Street analysts, Time Warner Cable’s revenue is expected to grow ~6.2% YoY to ~$6.1 billion for the quarter.

Earlier in 4Q15, the revenue stream had increased by ~4.9% YoY. Note that on an organic level, this was the maximum revenue growth in a fourth quarter during the five-year period, according to the company.

Now let’s look at the company’s consensus versus actual revenue performance in recent quarters. As we can see in the above graph, TWC beat Wall Street analysts’ consensus revenue estimate marginally in 4Q15. But in the previous three quarters of 2015, it did not.

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Time Warner Cable’s revenue in 4Q15

During 4Q15, high-speed data components continued to drive revenue growth for Time Warner Cable’s Business Services and Residential Services segments.

Overall, the revenue of the Residential Services segment increased modestly by ~4.6% YoY to ~$4.8 billion during the quarter. During 4Q15, the residential high-speed data component’s revenue grew ~10.6% YoY to ~$1.8 billion.

Revenue for the Business Services segment increased ~14.4% YoY to ~$0.86 billion during the quarter. During 4Q15, the revenue of the high-speed data component in Business Services grew ~19.1% YoY to ~$0.43 billion.

For a diversified exposure to some of the largest cable companies in the United States, you may consider investing in the iShares Core S&P 500 ETF (IVV). The ETF held a total of ~1.2% in Comcast (CMCSA) (CMCSK), Time Warner Cable (TWC), and Cablevision (CVC) at the end of March 2016.

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