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Time Inc. (TIME): What Will Q3 Earnings Release Unveil?

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Time Inc. (TIME - Free Report) is slated to report third-quarter 2016 results on Nov 3, before the opening bell. In the last quarter, it reported a positive earnings surprise of 37.5%. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 10%. Let’s see how things are shaping up prior to this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Time Inc. is likely to beat estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Time Inc. has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 31 cents. The company carries a Zacks Rank #1, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

Factors Influencing this Quarter

Time Inc. has been focusing on the creation of digital properties and intends to increase its digital advertising revenues by enhancing native branded content and video. Further, the company is concentrating on customization of data to help advertisers target their audience more effectively. In this relation, the company acquired the assets of Viant. Management anticipates Viant to contribute over $100 million of digital advertising revenue in 2016. There has been a drastic change in audience preference due to which advertisers have shifted dollars to digital video. Management anticipates total revenue to be flat to up 1.5% in 2016, down from the previous forecast of 1–5% growth.

We observe that total advertising revenue inched up 1% during second-quarter 2016. Print and other advertising revenue fell 13%, whereas digital advertising revenue soared 65%. Time Inc. is targeting adjacent revenue opportunities, which include Live Media, SI Play, eCommerce and various other products. Further, Time Inc. has acquired inVNT, a company that specializes in live media.

For third-quarter 2016, management had earlier projected total revenue to be roughly flat year over year. Time Inc. envisions advertising revenue to be up mid to high single-digits year over year and subscription revenue to decline in the low double-digits, with newsstand revenue to be down about 20%. Operating expenses are anticipated to be flat to up low single-digits.

TIME INC Price and EPS Surprise

TIME INC Price and EPS Surprise | TIME INC Quote

Stocks Poised to Beat Earnings Estimates

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

Nexstar Broadcasting Group, Inc. (NXST - Free Report) has an Earnings ESP of +12.64% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Twitter, Inc. has an Earnings ESP of +40.00% and a Zacks Rank #3.

Starz has an Earnings ESP of +19.23% and a Zacks Rank #3.

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