With shares of Time Warner Cable Inc. (NYSE:TWC) trading at around $95.53, is TWC an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
Time Warner Cable is an interesting company. This is a company that has a reputation for awful customer service, yet it’s also a company that finds a way to deliver. Look at the stock’s incredible performance over the past three years as an example. It’s up almost 150 percent, and that’s with a 2.40 percent yield.
In regards to customer service, the company has a habit of hiring people who will work for cheap and have limited dedication to their jobs. Phone hang-ups by customer service representatives take place too often, and incorrect billings do occur. Time Warner Cable is launching a “Did You Know” campaign to raise customer awareness of products, features, and customer care. It’s supposed to be “fun and engaging.” There are many things in the world that are fun and engaging, but customer awareness isn’t one of them.
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Another negative is that Time Warner Cable has a tendency to nickel and dime its customers. One of the latest approaches has been to charge customers a monthly fee for using their modem. This is bad for the customer, but it’s not so bad for the investor. Time Warner Cable has a knack for balancing everything out so customers remain content while investors are rewarded.
On the more positive side, Time Warner Cable launched a video streaming application for Apple’s (NASDAQ:AAPL) iPad, iPhone, and iPod Touch. This application will allow users to watch up to 4,000 TV shows and movies. This is a wise move by Time Warner Cable. It’s entering a market where future competition will be fierce. Time Warner Cable won’t stop there, either. The next step is to take a similar approach with Google’s (NASDAQ:GOOG) Android. Speaking of Google, the company has launched its Google Fiber in the Midwest. It offers superior broadband speed, 200 HD channels, Netflix (NASDAQ:NFLX) at no extra cost, and a DVR that’s capable or recording up to eight shows at once. This might seem like a threat to Time Warner Cable, but despite bundle packages taking some heat right now, a basic bundle package is still more affordable than Google’s Internet + TV package.
In other news, Time Warner Cable has hired 50 employees in the Dayton and Springfield areas. This isn’t a large number of new employees, but it’s always a good sign when a company is hiring.
Let’s take a look at some important numbers to help determine the future direction of Time Warner Cable’s stock.