Cable giant Time Warner Cable (NYSE: TWC) will post fourth-quarter earnings results on Thursday morning, Jan. 28. And with its proposed merger with Charter Communications (NASDAQ:CHTR) seeming more likely to go through, the stock has outperformed the broader market lately. It is down 2% over the past three months, compared to an 8% drop for the S&P 500:

TWC Chart

TWC data by YCharts

With that in mind, here are a few important operating trends for investors to watch in this week's earnings results.

Cord-cutting turning point
TWC last quarter trumpeted the fact that it lost 7,000 cable subscribers. At a glance, that might sound like bad news. But it's actually a huge improvement (+177,000 customers) over the recent past.

Cable subscriber losses in each Q3 since 2009. Image source: TWC investor presentation.

As the above chart shows, TWC had shed more than 100,000 subscribers in each of the past five third-quarter periods, making last quarter's residential video performance the best Q3 since 2006.

We know that the positive momentum carried on into the fourth quarter, since the company announced that it ended 2015 with more video subscribers than it had at the start of the year – for the first net positive result on that metric in almost a decade. Look for TWC to post solid subscriber growth in the fourth quarter, with management likely to discuss how they plan to keep these customer relationships strong through things like improved customer service and a deeper portfolio of programming.

Spiking programming costs
Yet TV content is expensive, and trending sharply higher these days. TWC booked a double-digit boost in programing costs last quarter, which was the biggest factor behind its slumping profitability. Adjusted gross margin slipped to 33% of sales – down from 36% last year.

Expenses are rising at a faster pace than revenue, leading to a drop in profitability. Image source: TWC investor presentation.

As usual, sports rights were the main factor behind those spiking content costs. And it isn't likely that TWC will scale back on that programming category any time soon, since it is one of the few areas of competitive advantage it holds over streaming services like Netflix (NASDAQ:NFLX). That's why investors can expect programming expenses to rise at a faster pace in 2015, around 10%, than the prior year's 7% uptick. As a result, overall profitability is likely to keep trending lower, at least in the short term.

Declining profits
In fact, consensus estimates call for TWC to post a 12% earnings decline this week even as revenue rises by 5%. EPS is projected to sink to $1.79 per share from the $2.03 it booked in the prior-year period.

TWC Net Income (TTM) Chart

Net income since 2010. TWC Net Income (TTM) data by YCharts

But management's forecast suggests a return to profit growth perhaps as early as this year. "We continue to believe that our subscriber and revenue momentum will translate into strong financial performance in 2016," Chief Financial Officer Matthew Siegel told investors in last quarter's earnings conference call. Look for the company to back up that bright outlook with hard numbers in this week's release.

With solid annual subscriber growth looking like a real possibility for the first time in a decade, shareholders might see an optimistic business projection from TWC's management team this week, which could help the stock continue to outperform in 2016.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.