Discovery (DISCA - Free Report) is set to report second-quarter 2020 results on Aug 5.
For the quarter, the Zacks Consensus Estimate for earnings has increased a penny to 71 cents per share over the past 30 days. The figure indicates 27.6% decline from the year-ago reported figure.
The consensus mark for revenues, pegged at $2.49 billion, implies a 13.6% decline from the year-ago reported figure.
Notably, the company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing the same in the rest, the average surprise being 2%.
Let’s see how things have shaped up for this announcement.
Factors to Consider
Discovery’s second-quarter 2020 performance is expected to have suffered from lower ad demand and spending due to the coronavirus outbreak. The company generates more than 55% of its revenues from advertising and the weakness is expected to have hurt Discovery’s top-line growth in to-be-reported quarter.
Moreover, cancellation of sporting events globally due to the pandemic is expected to have deterred growth for Eurosport, Discovery’s primary sports-oriented linear network. Moreover, late resumption of sporting events in Europe is expected to have hurt Dplay’s viewership.
Further, the bottom-line performance is likely to reflect incremental spending on direct-to-consumer initiatives and International growth efforts during the quarter.
Nevertheless, Discovery is likely to have gained traction from the growing popularity of Food Network. Further, the increasing availability of its content across linear, digital over-the-top platforms like Hulu and Sling TV is expected to have improved traffic.
International revenues are also likely to have got a boost from the U.K. TV Lifestyle business.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Discovery has an Earnings ESP of -7.04% and a Zacks Rank #4. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some other companies worth considering as per our model, these have the right combination of elements to beat on earnings this reporting cycle:
GoPro (GPRO - Free Report) has an Earnings ESP of +9.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peloton Interactive (PTON - Free Report) has an Earnings ESP of +29.03% and is #2 Ranked.
ViacomCBS (VIAC - Free Report) has an Earnings ESP of +23.03% and a Zacks Rank of 3.
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