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2 Media Stocks Up More Than 30% YTD That Still Have Room to Run
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The growing demand for high-speed Internet, including broadband and advancement in mobile, video, and wireless technologies, has aided media and entertainment players, including Pearson (PSO - Free Report) and World Wrestling Entertainment .
The emergence of digital capabilities is making consumer data easily available to companies. With the use of AI tools, production houses are gaining a better understanding of user preference. This is helping them produce content that strikes a chord with users.
Media companies have been witnessing rapid evolution in alternative distribution channels for broadcast and cable programming. The declining profitability of residential video services due to rising programming costs and retransmission fees has made survival difficult for traditional companies.
Additionally, the heightened need for on-demand content has led to the mushrooming of streaming service providers, making it tricky for traditional media television companies to maintain their viewer bases.
To adapt to the changes in the industry, companies have come up with varied content for over-the-top (OTT) services, be it subscription-based video on demand or advertising supported, in addition to linear TV.
Additionally, they have been adding OTT services to their content portfolios. The availability of streaming services on a wide range of platforms has been helping such services easily reach a global audience. Further, a strengthening broadband ecosystem in international markets, along with the proliferation of smart TVs, is anticipated to drive growth in the near term.
Media companies’ ability to generate ad revenues outside traditional TV platforms, such as websites and any digitally-consumed platform, provides increased scope for target-based advertising.
As monetization and revenues in terms of ad-spend continue to recover, profit protection and cash management with greater technology integration are likely to drive growth in 2023.
Our Top Picks
We have taken the help of the Zacks Stocks Screener to shortlist two media stocks that have gained more than 30% this year and are likely to continue their winning streak next year. These stocks carry and Zacks Rank #2 (Buy) and a VGM Score of A or B. Both Pearson and World Wrestling Entertainment have outperformed the Zacks Consumer Discretionary sector in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Year-to-Date Performance
Image Source: Zacks Investment Research
World Wrestling Entertainment is an integrated media and entertainment company engaged in the sports entertainment business in the United States and internationally. WWE gained from the return to a full live event schedule, a stellar consumer products business and monetization of content.
The company has raised its full-year OIBDA guidance. Management expects 2022 adjusted OIBDA to be at the upper end of the earlier projected range of $370-$385 million. WWE also announced a multi-year deal with its long-standing partner, the Foxtel Group, to expand content distribution in Australia. It also announced the creation of NXT Europe, slated to be launched next year, to expand the NXT brand internationally.
Markedly, WWE has been expanding its reach across platforms such as Peacock and Spotify and establishing new sponsors and product partners. WWE’s diversified distribution approach helps it in attaining solid viewership.
The company currently has a VGM Score of A. The Zacks Consensus Estimate for the company's current financial year EPS and for 2023 suggests growth of 21.2% and 10.7% from the year-ago period to $2.57 and $2.85 per share, respectively. The company’s shares have returned 52.9% in the year-to-date period.
Pearson is a global media conglomerate. It publishes books, periodicals, reports and screen-based services for professional communities worldwide under brand names, which include the Financial Times, Pitman Publishing and Churchill Livingstone.
In addition, the company delivers and installs off-the-shelf software and provides services to academic institutions, such as program development, student acquisition, education technology, and student support services, as well as undertakes contracts to process qualifying tests for individual professions and government departments under multi-year contractual arrangements.
Pearson is well-positioned for changing educational, training and assessment needs. From virtual learning to workforce skills, Pearson is involved in all sorts of areas, which should grow in importance in an increasingly digital, skill-based economy.
The company currently has a VGM Score of B. The Zacks Consensus Estimate for the company's current financial year EPS and for 2023 suggests growth of 18.7% and 21.9% from the year-ago period to 57 cents and 69 cents per share, respectively. The company’s shares have returned 35.4% in the year-to-date period.
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2 Media Stocks Up More Than 30% YTD That Still Have Room to Run
The growing demand for high-speed Internet, including broadband and advancement in mobile, video, and wireless technologies, has aided media and entertainment players, including Pearson (PSO - Free Report) and World Wrestling Entertainment .
The emergence of digital capabilities is making consumer data easily available to companies. With the use of AI tools, production houses are gaining a better understanding of user preference. This is helping them produce content that strikes a chord with users.
Media companies have been witnessing rapid evolution in alternative distribution channels for broadcast and cable programming. The declining profitability of residential video services due to rising programming costs and retransmission fees has made survival difficult for traditional companies.
Additionally, the heightened need for on-demand content has led to the mushrooming of streaming service providers, making it tricky for traditional media television companies to maintain their viewer bases.
To adapt to the changes in the industry, companies have come up with varied content for over-the-top (OTT) services, be it subscription-based video on demand or advertising supported, in addition to linear TV.
Additionally, they have been adding OTT services to their content portfolios. The availability of streaming services on a wide range of platforms has been helping such services easily reach a global audience. Further, a strengthening broadband ecosystem in international markets, along with the proliferation of smart TVs, is anticipated to drive growth in the near term.
Media companies’ ability to generate ad revenues outside traditional TV platforms, such as websites and any digitally-consumed platform, provides increased scope for target-based advertising.
As monetization and revenues in terms of ad-spend continue to recover, profit protection and cash management with greater technology integration are likely to drive growth in 2023.
Our Top Picks
We have taken the help of the Zacks Stocks Screener to shortlist two media stocks that have gained more than 30% this year and are likely to continue their winning streak next year. These stocks carry and Zacks Rank #2 (Buy) and a VGM Score of A or B. Both Pearson and World Wrestling Entertainment have outperformed the Zacks Consumer Discretionary sector in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Year-to-Date Performance
Image Source: Zacks Investment Research
World Wrestling Entertainment is an integrated media and entertainment company engaged in the sports entertainment business in the United States and internationally. WWE gained from the return to a full live event schedule, a stellar consumer products business and monetization of content.
The company has raised its full-year OIBDA guidance. Management expects 2022 adjusted OIBDA to be at the upper end of the earlier projected range of $370-$385 million. WWE also announced a multi-year deal with its long-standing partner, the Foxtel Group, to expand content distribution in Australia. It also announced the creation of NXT Europe, slated to be launched next year, to expand the NXT brand internationally.
Markedly, WWE has been expanding its reach across platforms such as Peacock and Spotify and establishing new sponsors and product partners. WWE’s diversified distribution approach helps it in attaining solid viewership.
The company currently has a VGM Score of A. The Zacks Consensus Estimate for the company's current financial year EPS and for 2023 suggests growth of 21.2% and 10.7% from the year-ago period to $2.57 and $2.85 per share, respectively. The company’s shares have returned 52.9% in the year-to-date period.
Pearson is a global media conglomerate. It publishes books, periodicals, reports and screen-based services for professional communities worldwide under brand names, which include the Financial Times, Pitman Publishing and Churchill Livingstone.
In addition, the company delivers and installs off-the-shelf software and provides services to academic institutions, such as program development, student acquisition, education technology, and student support services, as well as undertakes contracts to process qualifying tests for individual professions and government departments under multi-year contractual arrangements.
Pearson is well-positioned for changing educational, training and assessment needs. From virtual learning to workforce skills, Pearson is involved in all sorts of areas, which should grow in importance in an increasingly digital, skill-based economy.
The company currently has a VGM Score of B. The Zacks Consensus Estimate for the company's current financial year EPS and for 2023 suggests growth of 18.7% and 21.9% from the year-ago period to 57 cents and 69 cents per share, respectively. The company’s shares have returned 35.4% in the year-to-date period.