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2 Media Stocks Set to Beat Estimates This Earnings Season
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Media companies’ results this earnings season are likely to reflect consumers’ growing preference for over-the-top (OTT) content consumption. The rise of streaming platforms has resulted in audiences moving away from traditional cable and satellite subscriptions.
The decline in ratings for broadcast television and the reduced demand for theatrical content sales pose significant challenges for industry participants. Advertisers' hesitant spending, driven by concerns over inflation and higher interest rates, has added to the industry's woes amid an increasing rate of cord-cutting and stiff competition from subscription video-on-demand and virtual Multichannel Video Programming Distributor services.
Despite stiff competition, industry players are benefiting from the spike in the demand for high-speed broadband. Strong demand for WiFi devices and wireless Internet has been a boon.
Diversified content offerings, which are original, regional, short and suitable for small screens (smartphones and tablets), improved Internet speed and penetration, and technological advancement are benefiting the industry participants. As monetization and revenues in terms of ad-spend continue to be subdued, profit protection and cash management with greater technology integration have gained strategic significance and are expected to have driven the top lines of industry participants like Disney (DIS - Free Report) and Paramount Global (PARA - Free Report) in the soon-to-be-reported quarter.
Industry Trends to Drive Growth
Investing in media companies at the forefront of the digital transformation, leveraging original content creation and the wave of high-speed Internet demand, presents a compelling opportunity. The convergence of these factors positions such companies to capture new revenue streams, expand internationally and navigate the evolving media landscape successfully.
The industry's pivot toward digital platforms is driving a surge in original content creation. Media companies like Warner Bros. Discovery (WBD - Free Report) are investing heavily in producing high-quality, exclusive content to meet the demands of a discerning audience. This shift is not only a response to changing consumption patterns but also a proactive strategy to differentiate and compete in a crowded digital space. Successful content creation not only enhances subscriber loyalty but also opens avenues for additional revenue streams through licensing and syndication deals.
Media companies are also experiencing a paradigm shift in revenue generation, moving beyond traditional TV platforms. The ability to harness ad revenues from diverse digital channels, including websites and other digital platforms, presents a significant growth opportunity. Target-based advertising, facilitated by the data-rich digital environment, is becoming a cornerstone for revenue diversification.
The growing preference for digital and subscription services over linear pay television has compelled media companies to alter their business models. Acknowledging the shift in consumer behavior, industry players are adopting alternative business models, such as skinny bundles, to provide more cost-effective options to consumers. These bundles, delivered at lower costs than traditional offerings, aim to attract a wider audience and enhance the industry's competitiveness.
The surge in demand for high-speed Internet, including broadband, is a pivotal catalyst propelling the growth of industry participants like Rogers Communications and Charter. Faster Internet speeds are fostering a preference for high-quality video content and the trend of binge-watching. The strengthening broadband ecosystem on a global scale, coupled with the proliferation of smart TVs, creates a conducive environment for media companies to thrive. As consumers seek seamless, high-quality content delivery, companies providing engaging digital experiences stand to benefit from the expanding market.
Continuous investment in technology, content innovation and strategic partnerships will be crucial to staying ahead in this dynamic landscape.
How to Make the Right Pick?
With the existence of a number of industry players, finding media stocks that have the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down your choices by looking at stocks that have the perfect combination of two key elements: a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have maximum chances of beating estimates at their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this favorable mix of ingredients, the odds of an earnings surprise are as high as 70%.
Best Bets
Given below are two media stocks that have the favorable combination to beat on earnings this reporting cycle:
Disney has been benefiting from a solid revival in the domestic and international theme park businesses. Latest attractions like the Frozen theme land at Hong Kong Disneyland and Walt Disney Park in Paris, as well as the Zootopia theme land at Shanghai Disney, are expected to have aided the theme park business.
The company’s focus on sports streaming, particularly Live Sports on ESPN+, remains a key catalyst in driving viewership. The renewal of the MLB sports rights deal through 2028 and the agreement with Spanish club football’s first division, La Liga, further strengthened the portfolio of its sports content.
The Zacks Consensus Estimate for earnings has moved south by 1% to $1 per share in the past 30 days.
Paramount Global is slated to report fourth-quarter 2023 results on Feb 28. The company currently has an Earnings ESP of +144.95% and carries a Zacks Rank #3.
Paramount Global has been benefiting from a spike in viewership for its streaming services, boosted by the strong adoption of Paramount+. An expanding content catalog of live sporting events and a solid portfolio of streaming services (both advertising and subscription-based offerings), including CBS All Access, Showtime OTT, Pluto TV, Noggin, and BET+, are expected to have boosted viewership in the to-be-reported quarter.
Moreover, subscriber growth is expected to have been boosted by the launch of Paramount+ with SHOWTIME plan, a cornerstone integration that makes Paramount+ the new streaming home for SHOWTIME.
The Zacks Consensus Estimate has remained steady at a loss of 4 cents per share in the past 30 days.
Image: Bigstock
2 Media Stocks Set to Beat Estimates This Earnings Season
Media companies’ results this earnings season are likely to reflect consumers’ growing preference for over-the-top (OTT) content consumption. The rise of streaming platforms has resulted in audiences moving away from traditional cable and satellite subscriptions.
The decline in ratings for broadcast television and the reduced demand for theatrical content sales pose significant challenges for industry participants. Advertisers' hesitant spending, driven by concerns over inflation and higher interest rates, has added to the industry's woes amid an increasing rate of cord-cutting and stiff competition from subscription video-on-demand and virtual Multichannel Video Programming Distributor services.
Despite stiff competition, industry players are benefiting from the spike in the demand for high-speed broadband. Strong demand for WiFi devices and wireless Internet has been a boon.
Diversified content offerings, which are original, regional, short and suitable for small screens (smartphones and tablets), improved Internet speed and penetration, and technological advancement are benefiting the industry participants. As monetization and revenues in terms of ad-spend continue to be subdued, profit protection and cash management with greater technology integration have gained strategic significance and are expected to have driven the top lines of industry participants like Disney (DIS - Free Report) and Paramount Global (PARA - Free Report) in the soon-to-be-reported quarter.
Industry Trends to Drive Growth
Investing in media companies at the forefront of the digital transformation, leveraging original content creation and the wave of high-speed Internet demand, presents a compelling opportunity. The convergence of these factors positions such companies to capture new revenue streams, expand internationally and navigate the evolving media landscape successfully.
The industry's pivot toward digital platforms is driving a surge in original content creation. Media companies like Warner Bros. Discovery (WBD - Free Report) are investing heavily in producing high-quality, exclusive content to meet the demands of a discerning audience. This shift is not only a response to changing consumption patterns but also a proactive strategy to differentiate and compete in a crowded digital space. Successful content creation not only enhances subscriber loyalty but also opens avenues for additional revenue streams through licensing and syndication deals.
Media companies are also experiencing a paradigm shift in revenue generation, moving beyond traditional TV platforms. The ability to harness ad revenues from diverse digital channels, including websites and other digital platforms, presents a significant growth opportunity. Target-based advertising, facilitated by the data-rich digital environment, is becoming a cornerstone for revenue diversification.
The growing preference for digital and subscription services over linear pay television has compelled media companies to alter their business models. Acknowledging the shift in consumer behavior, industry players are adopting alternative business models, such as skinny bundles, to provide more cost-effective options to consumers. These bundles, delivered at lower costs than traditional offerings, aim to attract a wider audience and enhance the industry's competitiveness.
The surge in demand for high-speed Internet, including broadband, is a pivotal catalyst propelling the growth of industry participants like Rogers Communications and Charter. Faster Internet speeds are fostering a preference for high-quality video content and the trend of binge-watching. The strengthening broadband ecosystem on a global scale, coupled with the proliferation of smart TVs, creates a conducive environment for media companies to thrive. As consumers seek seamless, high-quality content delivery, companies providing engaging digital experiences stand to benefit from the expanding market.
Continuous investment in technology, content innovation and strategic partnerships will be crucial to staying ahead in this dynamic landscape.
How to Make the Right Pick?
With the existence of a number of industry players, finding media stocks that have the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
You could narrow down your choices by looking at stocks that have the perfect combination of two key elements: a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks that have maximum chances of beating estimates at their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this favorable mix of ingredients, the odds of an earnings surprise are as high as 70%.
Best Bets
Given below are two media stocks that have the favorable combination to beat on earnings this reporting cycle:
Disney is slated to report first-quarter fiscal 2024 results on Feb 7. The company currently has an Earnings ESP of +0.13% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Disney has been benefiting from a solid revival in the domestic and international theme park businesses. Latest attractions like the Frozen theme land at Hong Kong Disneyland and Walt Disney Park in Paris, as well as the Zootopia theme land at Shanghai Disney, are expected to have aided the theme park business.
The company’s focus on sports streaming, particularly Live Sports on ESPN+, remains a key catalyst in driving viewership. The renewal of the MLB sports rights deal through 2028 and the agreement with Spanish club football’s first division, La Liga, further strengthened the portfolio of its sports content.
The Zacks Consensus Estimate for earnings has moved south by 1% to $1 per share in the past 30 days.
The Walt Disney Company Price and EPS Surprise
The Walt Disney Company price-eps-surprise | The Walt Disney Company Quote
Paramount Global is slated to report fourth-quarter 2023 results on Feb 28. The company currently has an Earnings ESP of +144.95% and carries a Zacks Rank #3.
Paramount Global has been benefiting from a spike in viewership for its streaming services, boosted by the strong adoption of Paramount+. An expanding content catalog of live sporting events and a solid portfolio of streaming services (both advertising and subscription-based offerings), including CBS All Access, Showtime OTT, Pluto TV, Noggin, and BET+, are expected to have boosted viewership in the to-be-reported quarter.
Moreover, subscriber growth is expected to have been boosted by the launch of Paramount+ with SHOWTIME plan, a cornerstone integration that makes Paramount+ the new streaming home for SHOWTIME.
The Zacks Consensus Estimate has remained steady at a loss of 4 cents per share in the past 30 days.
Paramount Global Price and EPS Surprise
Paramount Global price-eps-surprise | Paramount Global Quote
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