Back to top

Image: Bigstock

Media Stock Earnings on May 9: TGNA, DISCA, DIS, NWSA, FWONA

Read MoreHide Full Article

Media industry trends have been mixed over the past three to four years, in terms of fiscal performance. While in each of the trailing four quarters of 2014 and 2015 the media industry trended down, a similar picture was seen in the first two quarters of 2016. In the third and fourth quarters of 2016, the media industry grew steadily. The first and second quarters of 2017 are expected to see diverse trends as well.

The downtrend observed may be due to the several headwinds faced by the media industry. Apart from intense competition and a saturated multi-channel video market in the U.S., the media industry remains affected by the ongoing massive consolidation between telecom and cable TV operators to strengthen their base.

Online video streaming service providers such as Netflix, Hulu.com, YouTube etc., pose severe threats to media companies because of their extremely cheap source of TV programming. This business model is gaining momentum, especially amid volatile economic conditions. Additionally, some media companies’ predominance in Europe is a major concern because of the prevalence of recessionary pressure, debt crisis and low per capita income in several European countries.

Over the past two weeks, we saw some of the major media companies such as such as Comcast Corp. (CMCSA - Free Report) , Charter Communications Inc. (CHTR - Free Report) , Liberty Global plc. (LBTYA), DISH Network Corp. and AMC Networks Inc. (AMCX) releasing first-quarter 2017 financial results. The numbers were mixed with some reporting impressive financial results (both earnings and revenues surpassing the Zacks Consensus Estimate), while others disappointing. We expect the rest of this earnings season to be a mixed bag as well.

As per the Zacks Industry classification, the media industry is grouped under the Zacks-categorized broader Consumer Discretionary sector, one of the 16 Zacks sectors. Based on the Earnings Preview as of May 5, 68.6% of the sector’s participants have reported their quarterly numbers. Earnings for these companies increased 18.4% year over year while sales rose 15.4%. Comparatively, the 412 S&P 500 companies that reported through May 5 recorded 14.2% growth in earnings and an 7.3% rise in revenues.

By the end of the first quarter, the sector’s earnings are projected to incline 11.2%, while revenues are expected to increase 11.4%. Meanwhile, total S&P 500 earnings and revenues are expected to improve 12.7% and 6.2% year over year, respectively.

Over the past one year, the price performance of the media industry has been showing an uptrend, thus outperforming the S&P 500 index. The media industry has gained 39.4% compared with the S&P 500’s gain of 14.7%, over the same time frame.

Accordingly, the media industry’s top-line and bottom-line performances look splendid over the past one year. Both revenues and earnings per share (EPS) BNRI (before non-recurring items) of the said industry grew steadily upward, over the said time frame.

Media Stocks to Release their Earnings on May 9

Our quantitative model offers some insight into stocks that are about to report their earnings. Per the model, in order to be confident of an earnings beat, a stock needs to have the right combination of the two key ingredients – a positive Earnings ESP and a Zacks Rank #3 (Hold) or better. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Investors interested in media stocks can watch out for the five media companies that are gearing up to release their earnings results on May 9.

Virginia-based publicly traded broadcast and digital media company TEGNA Inc. (TGNA - Free Report) will report first-quarter 2017 results. Last time, the company had delivered a positive earnings surprise of 12.12%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average positive surprise being 9.00%. This time, TEGNA has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% Earnings ESP (both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 33 cents) makes surprise prediction difficult (read more: TEGNA to Report Q1 Earnings: What’s in the Cards?).

TEGNA Inc. Price and EPS Surprise

 

TEGNA Inc. Price and EPS Surprise | TEGNA Inc. Quote

Silver Spring, MD-based Discovery Communications, Inc. will release first-quarter 2017 results before market open.

The company has an Earnings ESP of -8.16%, with the Most Accurate estimate pegged at 45 cents and the Zacks Consensus Estimate at 49 cents.  It came up with positive earnings surprises in three of the last four quarters, with a beat of 5.94%.

Discovery has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into an earnings announcement, especially when the company is seeing negative estimate revisions (read more: Discovery Q1 Earnings: Disappointment in Store?).

Media giant The Walt Disney Company (DIS - Free Report) , which will report second-quarter fiscal 2017 results after the closing bell, missed the Zacks Consensus Estimate in two out of the trailing four quarters, with the average negative earnings surprise being 0.47%. It has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at $1.45. Hence, we cannot predict an earnings beat for the company in spite of its Zacks Rank #3 (read more: Factors Likely to Influence Disney's Earnings in Q2).

New York based, mass media company News Corporation (NWSA - Free Report) will report third-quarter fiscal 2017 earnings. It has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 4 cents. This make surprise prediction difficult despite the company’s Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

News Corp’s earnings lagged the Zacks Consensus Estimate in two out of the trailing four quarters, with the average earnings miss being 7.78% (read more: News Corp. Q3 Earnings: What's in Store this Time?).

News Corporation Price and EPS Surprise

 

News Corporation Price and EPS Surprise | News Corporation Quote

Based in Colorado,Liberty Media Corporation (FWONA - Free Report) is engaged in media, communications and entertainment businesses through its subsidiaries and investments in publicly traded companies. The company will release its first-quarter 2017 results.

Just like the two companies discussed above, we cannot predict an earnings surprise for Liberty Media Corp. in the to-be reported quarter. In spite of having a favorable Zacks Rank #3, the company has a 0.00% ESP (as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at a loss of 23 cents).

The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat being 118.49%.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>

Published in