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Will Time Warner (TWX) Beat Earnings?

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We expect Time Warner (TWX - Free Report) , a media and entertainment company, to beat expectations when it reports first-quarter fiscal 2014 results on Apr 30, 2014. In the last quarter, it posted a positive surprise of 1.74%.

Why a Likely Positive Surprise?

Our proven model shows that Time Warner is likely to beat earnings because it has the right combination of two key components.  

Positive Zacks ESP: Time Warner currently has an Earnings ESP of +1.14%. This is because the Most Accurate estimate stands at 89 cents, while the Zacks Consensus Estimate is pegged at 88 cents.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.

The combination of Time Warner’s Zacks Rank #3 (Hold) and +1.14% ESP makes us confident regarding a positive earnings beat on Apr 30.

What is Driving the Better-than-Expected Earnings?

Time Warner’s initiatives such as foray into new markets, divestment activities and digital endeavors augur well for its operating performance. Moreover, the company’s investments in programming, production and marketing, coupled with its focus on operating and capital efficiencies bode well. Also, the company has been expanding its digital presence to facilitate consumers to enjoy content on more platforms and devices.

The company in the last 4 quarters has outperformed the Zacks Consensus Estimate by an average of 8.8%.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows these have the right combination of elements:

Unit Corporation (UNT - Free Report) has an Earnings ESP of +2.70% and a Zacks Rank #1 (Strong Buy).

Wynn Resorts Ltd. (WYNN - Free Report) has an Earnings ESP of +1.90% and a Zacks Rank #2 (Buy).

General Dynamics Corp. (GD - Free Report) has an Earnings ESP of +1.14% and a Zacks Rank #3 (Hold).

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