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Analyst Blog

Viacom Inc. (VIAB - Analyst Report) is set to release its first-quarter fiscal 2014 results before the opening bell on Jan 30, 2014.

In the last quarter, the company delivered a 7.64% earnings surprise. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

Viacom benefits from a well-balanced asset mix with entertainment content at its core. It also benefits from its agreement to distribute digital content to online video streaming companies, such as Netflix and Hulu.

On the flipside, the cable TV industry in the U.S. is highly matured and saturated. Viacom’s flagship cable channels are already distributed and there is limited scope for driving revenues by expanding distribution channels. Moreover, online video streaming companies pose a major threat for the cable TV operators, who may not be able to pay higher affiliate fees to Viacom since its contents can be viewed online.


Earnings Whispers

Our proven model does not conclusively show that Viacom is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate is poised at $1.15. Hence, the ESP is 0.00%.

Zacks Rank #3 (Hold): Viacom’s Zacks Rank #3, decreases the predictive power of ESP.

We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of 0.00% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise for Viacom.


Other Stocks to Consider


Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.


Frontier Communications Corporation (FTR - Analyst Report) has Earnings ESP of +16.67% and carries a Zacks Rank #3.


Shaw Communications Inc. (SJR - Analyst Report) has Earnings ESP of +2.63% and carries a Zacks Rank #3.

DIRECTV (DTV - Analyst Report) has Earnings ESP of +2.34% and carries a Zacks Rank #3.

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