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Warner Bros. Discovery (WBD) to Post Q1 Earnings: What's Up?

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Warner Bros. Discovery (WBD - Free Report) is set to report first-quarter 2022 results on Apr 26.

On Apr 8, Discovery and AT&T's Warner Media unit completed the previously announced merger, to form a combined company Warner Bros. Discovery.

For the quarter, the Zacks Consensus Estimate for earnings has remained unchanged in the past 30 days at 56 cents per share. The figure indicates a 166.67% growth from the year-ago quarter’s reported figure.

The consensus mark for revenues is pegged at $3.14 billion, calling for a 12.43% increase from the year-ago quarter’s reported figure.

The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, missing the same in the remaining two. Warner Bros. Discovery has a trailing four-quarter negative earnings surprise of 22.79%, on average.

Let’s see how things have shaped up for this announcement.

Factors to Consider

Warner Bros. Discovery’s first-quarter 2022 performance is expected to have benefited from an improved ad-spending environment. The company generates more than 50% of its revenues from advertising.

The company boasts a strong non-fiction content portfolio. The increasing availability of its content across linear, digital over-the-top platforms like Hulu and Sling TV is expected to have improved traffic. Strong demand for unscripted content is likely to have contributed to Dplay’s performance.

Warner Bros. Discovery is expected to have benefited from solid viewership of multiple channels, including Discovery Channel, Animal Planet, Food Network, HGTV, MotorTrend, Science, TLC, ID, Oprah, Eurosport, the Cooking Channel and UKTV Lifestyle.

The resumption of sporting events globally is expected to have boosted growth for Eurosport, which was renamed as Discovery Sports Events during the first quarter.

Warner Bros. Discovery, Inc. Price and EPS Surprise

 

Warner Bros. Discovery, Inc. Price and EPS Surprise

Warner Bros. Discovery, Inc. price-eps-surprise | Warner Bros. Discovery, Inc. Quote

 

In the to-be-reported quarter, Warner Bros. Discovery confirmed entered into exclusive discussions with BT Group to create a new sports venture by combining its Eurosport business in the U.K. and Ireland with BT Sport. Despite pending a definite agreement and regulatory approval, the companies expect the 50:50 Joint Venture to be operational in 2022.

Discovery+ is off to an impressive start. Discovery+ ended the fourth quarter of 2021 with 22 million paying direct-to-consumer subscribers. The company launched Discovery+ on Comcast Xfinity and Amazon prime video Channels in the United States, Starzplay in MENA and Samsung Smart TVs and Amazon Fire TV devices in the U.K. and Ireland.

At the beginning of the first quarter, Warner Bros. Discovery and LG Electronics Canada announced that Discovery+ is now available on LG Smart TVs in Canada, including LG’s line-up of award-winning LG OLED TVs and LG QNED MiniLED TVs. This is expected to have aided the top line in the to-be-reported quarter.

International revenues are likely to have been boosted from improvement in the ad-spending environment, particularly in the U.K., Italy, Germany and Poland.

However, incremental spending on direct-to-consumer initiatives (marketing and content costs) is expected to have hurt profitability in the first quarter.

Key Q1 Highlights

In January, Warner Bros. Discovery announced that it would become a minority owner of OpenAP, an advanced advertising company. With the investment in OpenAP, Discovery joins FOX, ViacomCBS and NBCUniversal in the joint venture.

In February, Warner Bros. Discovery and Omnicom Media Group (OMG) announced a new data trial pilot to offer new currencies to advertisers in the upcoming television Upfront season.

The company also reported record Olympic Winter Games viewership and engagement on its digital platforms, as the household appeal of discovery+ drove significantly higher consumption and numbers of new paid subscribers compared with PyeongChang 2018.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Warner Bros. Discovery has an Earnings ESP of -1.32% and currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:

Gildan Activewear (GIL - Free Report) has an Earnings ESP of +10.20% and a Zacks Rank #1(Strong Buy). The company is set to announce fourth-quarter 2021 results on May 5 You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaWorld Entertainment has an Earnings ESP of +38.64% and a Zacks Rank #1. The company is set to announce first-quarter 2022 results on May 5.

Golden Entertainment (GDEN - Free Report) has an Earnings ESP of +7.72% and a Zacks Rank #1. The company is set to announce first-quarter 2022 results on May 5.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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