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World Wrestling (WWE) Echoes Q4 OBIDA Outlook, Stock Down

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World Wrestling Entertainment, Inc. reiterated its 2016 adjusted OIBDA and operating income guidance. Moreover, the company revised its anticipated range of average paid WWE Network subscribers for the fourth quarter.

However, the guidance failed to impress investors, as the stock declined 3% in after-hours trading session on Dec 12. In fact, the company’s shares have underperformed the Zacks categorized Movie/TV Production/ Distribution industry in the past three months. In the said period, the stock portrayed a dismal show and increased only 2.7%, as against the Zacks categorized industry that surged 11.7%.

World Wrestling Entertainment continues to expect adjusted OBIDA of nearly $20 million to $24 million and operating income of $12 million to $16 million for fourth-quarter 2016. In the fourth quarter, the company expects a minimum of 1.40 million average paid subscribers to WWE Network. Earlier, it had projected average paid subscribers of 1.40 (plus or minus 2%).

For 2016, the company continues to anticipate adjusted OBIDA in the range of $80 million to $84 million and operating income of $54 million to $58 million. Paid subscriber base for WWE Network is expected to be nearly 1.42, demonstrating growth of 25% year over year.

During third-quarter conference call, the company initiated 2017 guidance. Management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. It is targeting adjusted OIBDA of $100 million, which is nearly 20% up from the 2016 projection of $80 million to $84 million. Operating income is likely to be $70 million.

Further, WWE expects contractual rise in television right fees from important distribution agreements and believes it will continue to add more WWE Network subscribers but at a lower rate on a year-over-year basis.

The Zacks Rank #4 (Sell) company operates in the highly competitive market of entertainment video. The competition in the entertainment video space has increased significantly and the company expects it to become more intense in the coming days. Many companies which have entered this market have better financial stability and can offer more technology and marketing resources than WWE. Further, these competitors are well positioned to aggressively price their offering.

Stocks to Consider

Some better-ranked stocks worth considering include MSG Networks Inc. , Netflix, Inc. (NFLX - Free Report) and NTN Buzztime, Inc. . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MSG Networks have surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 12.1%. Moreover, the company’s shares have gained more than 13% in the past three months.

Netflix shares have gained 28% in the past three months and it has an impressive long-term earnings growth rate of 23.8%.

NTN Buzztime has long-term earnings growth rate of 20%.

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