The third-quarter earnings season is past the halfway mark now with reports from 73% of the S&P 500 companies already out as of Nov 2 (per the latest Earnings Outlook report). The outcome of the season so far has given a decent growth picture, breaking the five-quarter-long lackluster trend. Clearly, this period is quite significant with both earnings and revenues on the growth trajectory.
Per our latest Earnings Outlook, out of the 364 S&P 500 companies that have come up with their quarterly numbers, approximately 72.3% posted positive earnings surprises, while 54.7% beat top-line expectations. According to the report, earnings for the 364 S&P 500 companies that have reported so far are up 1.6% from the same period last year, while revenues have also increased 1.6%.
Further, the report projects that earnings for the total S&P 500 companies will improve 2.4% from the year-ago period with total revenue rising 1.4%. In second-quarter 2016, earnings for the S&P 500 companies declined 2.8%, whereas revenues were flat.
In the Q3 earnings season, the widely diversified Consumer Discretionary sector has witnessed encouraging earnings.
Per the latest report, nearly 54.3% of the Consumer Discretionary companies have already reported their third-quarter results, out of which 68.4% beat earnings and 47.4% surpassed revenue estimates. Total earnings for these companies climbed 11% while revenues increased 7.9% year over year. Media stocks form part of the Consumer Discretionary sector.
Among Media stocks lined up to report on Nov 7, let’s take a sneak peek at three companies.
News Corporation (NWSA - Free Report) , the diversified media conglomerate, is slated to report first-quarter fiscal 2017 results. The question lingering in investors’ minds is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, News Corporation underperformed the Zacks Consensus Estimate by an average of 17.5%.
News Corporation is in a transitionary phase, looking to diversify its revenue streams through strategic acquisitions and operational enhancement. The company is expanding its digital offerings, along with greater emphasis on real estate businesses. However, foreign currency headwinds and soft print advertising demand continue to weigh upon the company’s performance to an extent.
Advertising, which forms a major part of News Corporation’s total revenue (approximately 44% of fiscal 2016 total revenue), remains highly susceptible to the economic conditions. Advertising revenue fell 5% during final-quarter fiscal 2016 at the News and Information Services segment. Adverse foreign currency fluctuations hurt fourth-quarter total revenue by $54 million.
News Corporation has an Earnings ESP of -100%. The Zacks Consensus Estimate for the quarter is pegged at 2 cents. The company carries Zacks Rank #4 (Sell). (Read more: News Corp. Q1 Earnings: Will the Stock Disappoint?)
Scripps Networks Interactive, Inc. is scheduled to release third-quarter 2016 financial numbers, before the opening bell. In second-quarter 2016, Scripps Networks posted a positive earnings surprise of 6.8%. In fact, the company boasts an impressive history with respect to earnings. Scripps Networks outpaced the Zacks Consensus Estimate in each of the last four quarters with an average earnings beat of 21.3%.
We expect the company’s third-quarter results to be hurt by headwinds like foreign exchange woes and escalating costs. We note that Scripps Networks reported lower-than-expected revenues in the second quarter. The unfavorable trend is expected to continue in the third quarter as well with the company’s top line declining in spite of strong advertising revenues. Further, the company’s high debt levels raise concerns. (Read more: Scripps Networks Q3 Earnings: Stock to Disappoint?)
Scripps Networks Interactive carries a Zacks Rank #4 and has an Earnings ESP of 1.08%. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Entercom Communications (ETM - Free Report) , the fourth largest radio broadcasting company in the U.S is scheduled to report third-quarter 2016 earnings on Nov 7. The Zacks Consensus Estimate for the company is currently pegged at 25 cents. Last quarter, it lagged the Zacks Consensus Estimate by 4.2%. The company is unlikely to beat the Zacks Consensus Estimate this quarter too, for it has an unfavorable combination of an Earnings ESP of 0.00% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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