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News Corp (NWSA) Q4 Earnings: Is a Disappointment Likely?

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News Corporation (NWSA - Free Report) , the diversified media conglomerate, is slated to report fourth-quarter fiscal 2017 results on Aug 10. 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 16%.

Which Way are Estimates Treading?

Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company prior to the earnings release. The current Zacks Consensus Estimate for the quarter under review has witnessed a downtrend in the last seven days, and is currently pegged at 8 cents, reflecting a 23.3% decline from the year-ago quarter. Analysts polled by Zacks expect revenues of $2.11 billion compared with $2.23 billion reported in the prior-year period.

News Corporation Price, Consensus and EPS Surprise

 

News Corporation Price, Consensus and EPS Surprise | News Corporation Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that News Corporation is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

News Corporation has an Earnings ESP of -25.00% as the Most Accurate estimate of 6 cents per share is pegged lower than the Zacks Consensus Estimate of 8 cents. Further, the company carries a Zacks Rank #4 (Sell), which combined with a negative ESP erodes chances of a beat.

Factors Influencing this Quarter

News Corporation is in a transitionary phase, looking to diversify revenue streams through strategic acquisitions and operational enhancement. The company is expanding digital offerings, along with greater emphasis on real estate businesses.  Further, News Corporation has outperformed the industry in the last one month. The company grew 9.1%, while the industry was up 1.3%.



However, foreign currency headwinds and soft print advertising demand continue to weigh upon the  performance.

Advertising, which forms a major part of News Corporation’s total revenue (approximately 44% of fiscal 2016 total revenue), remains highly vulnerable to the economic conditions. We believe that the macro-economic factors such as softness in business spending, high unemployment and falling home sales may adversely affect the level of national, retail and classified advertising revenues, as advertisers cut their budget in response to weak economic conditions.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Coach Inc. (COH - Free Report) currently has an ESP of +2.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vail Resorts, Inc. (MTN - Free Report) has an ESP of +1.09% and has a Zacks Rank #3.

Carnival Corporation (CCL - Free Report) has an ESP of +0.46% and carries a Zacks Rank #3.

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