Why TiVo (TIVO) Is Up Today

NEW YORK (TheStreet) -- TiVo (TIVO) was gaining 5.7% to $13.56 Thursday after missing analysts' estimate for earnings, but revenues beat revenue forecasts.

For the fourth-quarter, TiVo earned 1 cent a share. Analysts surveyed by Thomson Reuters expected earnings of 4 cents a share for the quarter. Revenue grew 61.8% from the year-ago quarter to $106.3 million, compared to estimates of $88.9 million.

TiVo said that it expects to benefit from the proposed merger of Comcast (CMCSA) and Time Warner Cable (TWC). TiVo has an agreement with Comcast that integrates the cable company's Xfinity On Demand digital movie and TV show store into TiVo's set-top boxes. The cable company has plans to expand that integration.

In the fourth quarter TiVo added 319,000 net subscribers, including 313,000 subscribers through its partnerships with cable and satellite providers.

Must read: TiVo searches for an edge in Digitalsmiths deal

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TheStreet Ratings team rates TIVO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIVO INC (TIVO) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, reasonable valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 42.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Software industry and the overall market, TIVO INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for TIVO INC is rather high; currently it is at 59.57%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, TIVO's net profit margin of 10.64% significantly trails the industry average.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 4.22 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: TIVO Ratings Report

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