The Zacks Analyst Blog Highlights: Automatic Data Processing, Comcast, Verizon Wireless, AT&T and Netflix

Aug 04, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Aug. 4, 2011 /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: Automatic Data Processing (Nasdaq: ADP), Comcast Corp. (Nasdaq: CMCSA), Verizon Wireless (NYSE: VZ) AT&T (NYSE: T) and Netflix Inc. (Nasdaq: NFLX).

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Here are highlights from Wednesday's Analyst Blog:

ADP Sees 114,000 New Jobs

The Automatic Data Processing (Nasdaq: ADP) employment survey was stronger than expected in July. It shows that private sector employment rose by 114,000,  above consensus expectations for a 100,000 increase.

However, last month, the ADP numbers were far too optimistic, and showed a gain of 157,000 private sector jobs. The hopes that were raised by those numbers were dashed a few days later when the BLS reported that only 57,000 private sector jobs were created. ADP revised its June numbers in the direction of the BLS numbers, but not very far, lowering its estimate by 12,000 to 145,000.

This is a somewhat encouraging report, if confirmed by the BLS on Friday. It is not a great report in an absolute sense, but it is better than expected, and offers reasons for hope after last month's dismal showing.

Over time, the ADP numbers do tend to align with the BLS numbers. There can, however, be substantial differences between the two reports on a month-to-month basis. Thus, it is not a slam dunk that the Friday report will be better than now expected, but that would be the way to bet. The BLS numbers do tend to get revised in the direction of the ADP numbers, so there is a good chance that the June BLS numbers will be revised upwards.

Comcast Posts Excellent Q2

Comcast Corp. (Nasdaq: CMCSA) reported excellent second-quarter 2011 financial results, which exceeded the Zacks Consensus Estimate. This performance was the combined effect of higher broadband subscribers' addition and increased contribution from NBC Universal, of which Comcast acquired a controlling stake in January 2011.

Although the company continues to suffer huge video subscriber loss, it has actually declined 10.2% year over year.

EPS

GAAP net income for the second quarter of 2011 was $1,022 million or 37 cents per share compared with a net income of $884 million or 31 cents per share in the prior-year quarter. Adjusted (excluding special items) EPS in the reported quarter was 42 cents, beating the Zacks Consensus Estimate by a penny.

Revenue

The second-quarter 2011 total revenue came in at $14,333 million, up 50.5% year over year. This was also better than the Zacks Consensus Estimate of $13,773 million. Cable Communications revenue increased significantly coupled with advertising revenue.  

Our Take

Comcast has become the largest integrated content development and distribution company of the U.S. after completing the acquisition of NBC Universal. We also remain quite optimistic regarding the company's diversification, network upgrade and innovative product offering strategies. Comcast continues to post strong growth in revenue and free cash flow.

However, Comcast is facing severe competition from both telecom and satellite service providers that started offering subscription TV services at a low price. Verizon Wireless (NYSE: VZ) with FiOS network and AT&T (NYSE: T) with U-Verse network are likely to make the market highly competitive. Growth of online video streaming companies, such as Netflix Inc. (Nasdaq: NFLX) and Hulu have become major threats for the company.

We maintain our long-term Neutral recommendation on Comcast. Currently, it holds a Zacks #3 Rank (Hold) on the stock.

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