With the second-quarter earnings season in full swing, the pessimistic view of negative earnings growth still lingers. The Earnings Trends report predicts a 3.4% year-over-year drop in earnings of the S&P 500 companies with 0.5% lower revenues. Thus, the quarter is still on track to be in the negative for the fifth straight quarter. Additionally, growth estimates of third-quarter 2016 are starting to lean into the negative as well. However, we anticipate a change in the last quarter of the year with expectations of growth in earnings to pick up.
While our data points to the fifth consecutive quarter of an earnings decline, we focus on some media companies that are expected to report their quarterly results on Jul 27, 2016.
Industry Trends
The broadcast TV industry is currently going through a transition. Even though the pay-TV business model continues to hold a major stake in the market, it is facing fierce competition from the latest over-the-top (OTT) online video streaming services. The massive growth of high-speed wireless networks, along with the popularization of devices like smartphones and tablets have greatly altered the taste of the millennial population subsequently has created an environment of growth for the OTT services.
There are many Cable giants who own media companies as well. While the recent development in the pay-TV industry has enabled such companies to generate revenues by selling original contents to OTT video streaming service providers, it has cannibalized their original source of revenues – subscription fees and advertisement fees and have been hugely affected due to the widespread cord-cutting. However, the latest trend has seen many such cable companies jumping on the video streaming bandwagon in order to stay in competition. Moreover, pay-TV operators are now ‘skinning’ their packages to counter cord-cutting. For media companies, escalation in production and programming costs for original content remains a persistent concern, going forward.
Earnings Preview
Comcast Corporation(CMCSA - Free Report) is a leading cable MSO (multi-service operator) in the U.S. The company has a Zacks Rank #3 (Hold) and an Earnings ESP of -1.22%. As per our proven model, which requires a combination of a Zacks Rank #3 or better and a positive Earnings ESP, Comcast doesn’t conclusively show that it is likely to beat the Zacks Consensus Estimate this quarter. (Read more: What's in Store for Comcast this Earnings Season?)
Entercom Communications is the fourth largest radio broadcasting company in the U.S.. Entercom has a Zacks Rank #4 (Sell) and a quarterly Earnings ESP of 13.04% indicating that the company is not likely to beat the Zacks Consensus Estimate this quarter. Last quarter the company lagged the Zacks Consensus Estimate by 57.14%.
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Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
With the second-quarter earnings season in full swing, the pessimistic view of negative earnings growth still lingers. The Earnings Trends report predicts a 3.4% year-over-year drop in earnings of the S&P 500 companies with 0.5% lower revenues. Thus, the quarter is still on track to be in the negative for the fifth straight quarter. Additionally, growth estimates of third-quarter 2016 are starting to lean into the negative as well. However, we anticipate a change in the last quarter of the year with expectations of growth in earnings to pick up.
While our data points to the fifth consecutive quarter of an earnings decline, we focus on some media companies that are expected to report their quarterly results on Jul 27, 2016.
Industry Trends
The broadcast TV industry is currently going through a transition. Even though the pay-TV business model continues to hold a major stake in the market, it is facing fierce competition from the latest over-the-top (OTT) online video streaming services. The massive growth of high-speed wireless networks, along with the popularization of devices like smartphones and tablets have greatly altered the taste of the millennial population subsequently has created an environment of growth for the OTT services.
There are many Cable giants who own media companies as well. While the recent development in the pay-TV industry has enabled such companies to generate revenues by selling original contents to OTT video streaming service providers, it has cannibalized their original source of revenues – subscription fees and advertisement fees and have been hugely affected due to the widespread cord-cutting. However, the latest trend has seen many such cable companies jumping on the video streaming bandwagon in order to stay in competition. Moreover, pay-TV operators are now ‘skinning’ their packages to counter cord-cutting. For media companies, escalation in production and programming costs for original content remains a persistent concern, going forward.
Earnings Preview
Comcast Corporation(CMCSA - Free Report) is a leading cable MSO (multi-service operator) in the U.S. The company has a Zacks Rank #3 (Hold) and an Earnings ESP of -1.22%. As per our proven model, which requires a combination of a Zacks Rank #3 or better and a positive Earnings ESP, Comcast doesn’t conclusively show that it is likely to beat the Zacks Consensus Estimate this quarter. (Read more: What's in Store for Comcast this Earnings Season?)
Entercom Communications is the fourth largest radio broadcasting company in the U.S.. Entercom has a Zacks Rank #4 (Sell) and a quarterly Earnings ESP of 13.04% indicating that the company is not likely to beat the Zacks Consensus Estimate this quarter. Last quarter the company lagged the Zacks Consensus Estimate by 57.14%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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