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AMC Networks (AMCX) to Report Q2 Earnings: A Beat in Store?

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We expect AMC Networks Inc. (AMCX - Free Report) to beat earnings when the company reports its second-quarter financial numbers on Aug 3, 2017 before market opens.

Last quarter, the company’s earnings surpassed the Zacks Consensus Estimate by 5%. AMC Networks has outpaced estimates in two of the past four quarters, with an average earnings miss of 2.25%.

 Let’s see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that AMC Networks is likely to beat earnings because it has the perfect combination of two key ingredients.

Zacks ESP: AMC Networks has an Earnings ESP of +1.42%. This is because the Most Accurate estimate stands at $1.43, higher than the Zacks Consensus Estimate of $1.41. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. 

Zacks Rank: AMC Networks currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

The combination of AMC Networks’ Zacks Rank #3 and an Earnings ESP of +1.42% makes us reasonably confident of an earnings beat on Aug 3.

AMC Networks Inc. Price and EPS Surprise

 

AMC Networks Inc. Price and EPS Surprise | AMC Networks Inc. Quote

What is Driving the Better-than-Expected Earnings?

AMC Networks owns and operates various cable television stations and is engaged in the production of programming and movie content. Its programming network channels include AMC, IFC, Sundance, WE and BBC America.

The company’s strength lies in programs with original content, for which it holds ownership rights. In this regard, shows like Breaking Bad and Mad Men have been major hits, driving commercial success for the company.

AMC Networks is boosting its regional growth in key markets with channel launches. Moreover, it has inked distribution deals with key pay-TV operators in Latin America, Central and Eastern Europe, Iberia and Africa to serve audiences with award-winning programs across multiple genres.

The company has successfully expanded its cable and DTH platforms in the Balkans region. We believe these deals will bring new series into the entertainment world and expand the company’s subscriber base in the to-be-reported quarter.

Over the past three months, price performance of AMC Networks has been impressive. The stock has returned 11.3 % compared with the industry’s gain of 6.4%.

However, serious competitive threats from over-the-top (OTT) online video-streaming service providers and other media companies, coupled with the recent trend of the bulk of ad revenues skewing toward internet TV, are factors that may mar the quarter’s performance. AMC Networks belongs to the highly competitive broadcast radio and television industry. Its major competitors include CBS Corp., Gray Television Inc. (GTN - Free Report) and Entercom Communications Corp. (ETM - Free Report) .

Another Stock to Consider

Time Warner Inc. (TWX - Free Report) , from the Zacks categorized broader Consumer Discretionary sector, has the right combination of elements to post an earnings beat when it expectedly reports second-quarter 2017 results on Aug 2. The company has an Earnings ESP of +1.68% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here

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