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Why Is WWE (WWE) Up 6.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for World Wrestling Entertainment . Shares have added about 6.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is WWE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
World Wrestling Q3 Earnings Beat, Revenues Rise Y/Y
World Wrestling Entertainment, Inc. posted third-quarter 2022 results, wherein the top and bottom lines not only beat the Zacks Consensus Estimate but also increased year over year. The upbeat performance can be attributed to growth in the Media segment and a shift in the timing of revenues related to certain licensing agreements.
Premium live events, such as Money in the Bank, SummerSlam and Extreme Rules, witnessed remarkable viewership. Clash at the Castle also witnessed stellar viewership. These events, coupled with solid ratings for flagship programs, Raw and SmackDown, continued to expand the brand reach and enhance the content value.
WWE also announced a multi-year deal with its long-standing partner, the Foxtel Group, to expand content distribution in Australia. It also announced the creation of NXT Europe, which is slated to be launched next year, to expand the NXT brand internationally.
Q3 Performance Insight
This Stamford, CT-based company reported third-quarter 2022 adjusted earnings of 65 cents a share, which surpassed the Zacks Consensus Estimate of 50 cents. The quarterly earnings increased significantly from the 52 cents a share reported in the prior-year quarter.
WWE’s revenues of $304.6 million came ahead of the consensus estimate of $285.7 million and surged 19% year over year, driven primarily by a jump in core content rights fees for flagship programs and the monetization of third-party original programming. Higher consumer product licensing revenues and international ticket sales also contributed to the top line.
A Look at Margins
WWE’s operating income of $58.9 million declined 8% year over year due to higher operating expenses on account of costs associated with the creation of content and expenses related to the Special Committee investigation. We note that the operating income margin contracted to 19% from 25% in the year-ago quarter. However, the adjusted operating income came in at $76.6 million, up from $64 million in the prior-year quarter.
Adjusted OIBDA came in at $91.2 million, up 17% year over year. The adjusted OIBDA margin remained flat at 30%.
Management foresees fourth-quarter adjusted OIBDA between $83 million and $90 million compared with $94.2 million reported in the year-ago period. The guidance indicates revenue growth, driven by an expected increase in media rights fees for premium live events as well as an expected increase in the monetization of third-party original programming and revenues from the staging of a large-scale international event. Management expects higher operating expenses in the final quarter.
Considering the stellar performance in the first nine months of the financial year, management now expects 2022 adjusted OIBDA to be at the upper end of the earlier projected range of $370-$385 million. The upbeat guidance suggests a full live event touring schedule, including large-scale international events, and the increased monetization of third-party original programming. It anticipates higher content-related expenses. WWE reported adjusted OIBDA of $324.1 million in 2021.
Segment Details
Media Division: Revenues in the Media division went up 15% to $233 million. The year-over-year increase can be attributed to a jump in domestic and international media rights fees associated with flagship programs. The increase was also related to the delivery of third-party original programming.
Core content rights fees increased to $156.7 million from $141.3 million in the prior-year period. Network revenues came in at $46.5 million, up from the $43.1 million reported in the year-ago quarter.
Meanwhile, advertising and sponsorship revenues declined to $13.2 million from $16.1 million in the year-ago period. Other media revenues jumped to $16.6 million from $2.2 million in the prior-year period.
Live Events: Revenues from Live Events came in at $35.2 million, up meaningfully from $28 million in the year-ago quarter. The upside can be attributed to an increase in international ticket sales from a major stadium event, Clash at the Castle.
The company held 58 ticketed live events in the reported quarter consisting of 57 events in North America and one in international markets. The average attendance at the North American events was roughly 6,300. North American ticket sales increased to $24.1 million from $23.8 million in the year-ago period. International ticket sales jumped to $8 million from $2.4 million in the prior-year quarter.
Consumer Products Division: The segment’s revenues of $36.4 million increased 45% year over year. We note that consumer product licensing revenues came in at $22.6 million, up from $11.6 million in the year-ago period.
Meanwhile, e-commerce merchandise sales declined to $7.6 million from $8.2 million in the prior-year period. Venue merchandise sales jumped to $6.2 million from $5.3 million in the year-ago quarter.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $181.7 million, net short-term investments of $259.3 million, long-term debt of $21 million and stockholders’ equity of $471.3 million.
Cash flow generated from operating activities during the quarter amounted to $54.5 million, while free cash flow was $3.5 million.
The company paid out $9.1 million to shareholders in dividends in the third quarter. The company did not repurchase any shares during the quarter. As of Sep 30, 2022, the company had approximately $210.9 million remaining under its share repurchase authorization of $500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -18.49% due to these changes.
VGM Scores
At this time, WWE has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WWE has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
WWE belongs to the Zacks Film and Television Production and Distribution industry. Another stock from the same industry, Imax (IMAX - Free Report) , has gained 37.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Imax reported revenues of $68.76 million in the last reported quarter, representing a year-over-year change of +21.5%. EPS of -$0.05 for the same period compares with -$0.08 a year ago.
For the current quarter, Imax is expected to post earnings of $0.15 per share, indicating a change of -51.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -44% over the last 30 days.
Imax has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Why Is WWE (WWE) Up 6.9% Since Last Earnings Report?
It has been about a month since the last earnings report for World Wrestling Entertainment . Shares have added about 6.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is WWE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
World Wrestling Q3 Earnings Beat, Revenues Rise Y/Y
World Wrestling Entertainment, Inc. posted third-quarter 2022 results, wherein the top and bottom lines not only beat the Zacks Consensus Estimate but also increased year over year. The upbeat performance can be attributed to growth in the Media segment and a shift in the timing of revenues related to certain licensing agreements.
Premium live events, such as Money in the Bank, SummerSlam and Extreme Rules, witnessed remarkable viewership. Clash at the Castle also witnessed stellar viewership. These events, coupled with solid ratings for flagship programs, Raw and SmackDown, continued to expand the brand reach and enhance the content value.
WWE also announced a multi-year deal with its long-standing partner, the Foxtel Group, to expand content distribution in Australia. It also announced the creation of NXT Europe, which is slated to be launched next year, to expand the NXT brand internationally.
Q3 Performance Insight
This Stamford, CT-based company reported third-quarter 2022 adjusted earnings of 65 cents a share, which surpassed the Zacks Consensus Estimate of 50 cents. The quarterly earnings increased significantly from the 52 cents a share reported in the prior-year quarter.
WWE’s revenues of $304.6 million came ahead of the consensus estimate of $285.7 million and surged 19% year over year, driven primarily by a jump in core content rights fees for flagship programs and the monetization of third-party original programming. Higher consumer product licensing revenues and international ticket sales also contributed to the top line.
A Look at Margins
WWE’s operating income of $58.9 million declined 8% year over year due to higher operating expenses on account of costs associated with the creation of content and expenses related to the Special Committee investigation. We note that the operating income margin contracted to 19% from 25% in the year-ago quarter. However, the adjusted operating income came in at $76.6 million, up from $64 million in the prior-year quarter.
Adjusted OIBDA came in at $91.2 million, up 17% year over year. The adjusted OIBDA margin remained flat at 30%.
Management foresees fourth-quarter adjusted OIBDA between $83 million and $90 million compared with $94.2 million reported in the year-ago period. The guidance indicates revenue growth, driven by an expected increase in media rights fees for premium live events as well as an expected increase in the monetization of third-party original programming and revenues from the staging of a large-scale international event. Management expects higher operating expenses in the final quarter.
Considering the stellar performance in the first nine months of the financial year, management now expects 2022 adjusted OIBDA to be at the upper end of the earlier projected range of $370-$385 million. The upbeat guidance suggests a full live event touring schedule, including large-scale international events, and the increased monetization of third-party original programming. It anticipates higher content-related expenses. WWE reported adjusted OIBDA of $324.1 million in 2021.
Segment Details
Media Division: Revenues in the Media division went up 15% to $233 million. The year-over-year increase can be attributed to a jump in domestic and international media rights fees associated with flagship programs. The increase was also related to the delivery of third-party original programming.
Core content rights fees increased to $156.7 million from $141.3 million in the prior-year period. Network revenues came in at $46.5 million, up from the $43.1 million reported in the year-ago quarter.
Meanwhile, advertising and sponsorship revenues declined to $13.2 million from $16.1 million in the year-ago period. Other media revenues jumped to $16.6 million from $2.2 million in the prior-year period.
Live Events: Revenues from Live Events came in at $35.2 million, up meaningfully from $28 million in the year-ago quarter. The upside can be attributed to an increase in international ticket sales from a major stadium event, Clash at the Castle.
The company held 58 ticketed live events in the reported quarter consisting of 57 events in North America and one in international markets. The average attendance at the North American events was roughly 6,300. North American ticket sales increased to $24.1 million from $23.8 million in the year-ago period. International ticket sales jumped to $8 million from $2.4 million in the prior-year quarter.
Consumer Products Division: The segment’s revenues of $36.4 million increased 45% year over year. We note that consumer product licensing revenues came in at $22.6 million, up from $11.6 million in the year-ago period.
Meanwhile, e-commerce merchandise sales declined to $7.6 million from $8.2 million in the prior-year period. Venue merchandise sales jumped to $6.2 million from $5.3 million in the year-ago quarter.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $181.7 million, net short-term investments of $259.3 million, long-term debt of $21 million and stockholders’ equity of $471.3 million.
Cash flow generated from operating activities during the quarter amounted to $54.5 million, while free cash flow was $3.5 million.
The company paid out $9.1 million to shareholders in dividends in the third quarter. The company did not repurchase any shares during the quarter. As of Sep 30, 2022, the company had approximately $210.9 million remaining under its share repurchase authorization of $500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -18.49% due to these changes.
VGM Scores
At this time, WWE has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WWE has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
WWE belongs to the Zacks Film and Television Production and Distribution industry. Another stock from the same industry, Imax (IMAX - Free Report) , has gained 37.7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Imax reported revenues of $68.76 million in the last reported quarter, representing a year-over-year change of +21.5%. EPS of -$0.05 for the same period compares with -$0.08 a year ago.
For the current quarter, Imax is expected to post earnings of $0.15 per share, indicating a change of -51.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -44% over the last 30 days.
Imax has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.