Discovery ( DISCA Quick Quote DISCA - Free Report) reported third-quarter 2020 adjusted earnings of 81 cents per share, beating the Zacks Consensus Estimate by 19.1% but decreasing 6.9% year over year. Revenues slid 4.4% year over year to $2.56 billion but beat the consensus mark by 2.1%. This year-over-year decline was primarily attributed to a decrease in advertising (51% of revenues) revenues. Top-Line Details
Advertising revenues dipped 7.6% year over year to $1.31 billion. Moreover, Distribution revenues fell 0.2% year over year to $1.20 billion. Other revenues were $56 million, down 12.5% from the year-ago quarter.
U.S. Networks (64.8% of revenues) revenues declined 3.8% on a year-over-year basis to $1.66 billion. Advertising revenues declined 7.7% while distribution revenues grew 2.2%.
Subscribers of Discovery’s fully distributed networks were 4% lower on a year-over-year basis. Total portfolio subscribers declined 6% year over year.
International Networks revenues (35.2% of revenues) slipped 5.1% year over year to $902 million. Advertising and distribution revenues were down 7.4% and 3.3%, respectively. Notably, total share of viewing across the international portfolio in the third quarter increased 5% on average, with strong share growth in the United Kingdom, Germany, Italy and Norway. Operating Details
In the third quarter, selling, general and administrative (SG&A) expenses decreased 4.1% from the year-ago quarter to $633 million. This year-over-year decline was due to 8% decrease in U.S. Networks SG&A and a 6% decrease in International Network’s SG&A.
Adjusted operating income before depreciation & amortization (“OIBDA”) decreased 15.3% from the year-ago quarter to $954 million. Excluding the foreign-exchange impact, OIBDA decreased 14%. U.S. Networks adjusted OIBDA decreased 5% from the year-ago quarter to $951 million. Moreover, International Networks adjusted OIBDA declined 46% from the year-ago quarter to $127 million. Excluding the forex impact, adjusted OIBDA was down 41%. GAAP operating income declined 14.2% year over year to $531 million. Balance Sheet & Cash Flow
As of Sep 30, 2020, cash & cash equivalents were $1.89 billion compared with $1.68 billion as of Jun 30, 2020.
Moreover, as of Jun 30, 2020, long-term debt was $14.94 billion, higher than $14.94 billion as of Jun 30, 2020. Free cash flow plunged 97% year over year to $787 million. Discovery repurchased shares worth $228 million in the reported quarter. Currently, $1.6 billion of the $2-billion authorization remains. Zacks Rank & Stocks to Consider
Currently, Discovery carries a Zacks Rank #3 (Hold).
DISH Network ( DISH Quick Quote DISH - Free Report) , TEGNA ( TGNA Quick Quote TGNA - Free Report) and Delta Apparel ( DLA Quick Quote DLA - Free Report) are some better-ranked stocks in the broader consumer & discretionary sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. DISH, TEGNA and Delta Apparel are set to report quarterly results on Nov 6, 9 and 19, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early. See the 5 high-tech stocks now>>