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Factors Likely to Decide News Corp's (NWSA) Fate in Q2 Earnings

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News Corporation (NWSA - Free Report) is slated to report second-quarter fiscal 2018 results on Feb 8. 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, this diversified media conglomerate outperformed the Zacks Consensus Estimate by an average of 88.2%.

Which Way Are Estimates Treading?

Let’s look at earnings estimate revisions to get a clear view of what analysts are thinking about the company prior to the release. The Zacks Consensus Estimate for the quarter has been stable in the last 30 days and is currently pegged at 19 cents, flat year over year. Analysts polled by Zacks expect revenue of $2,133 million, up from $2,116 million in the prior-year quarter.

Factors Influencing Q2

News Corporation is diversifying its revenue streams through strategic acquisitions and operational enhancement. The company is expanding its digital offerings, emphasizing on real estate businesses and augmenting digital subscriber base. Further, it has been concentrating on cost cutting.

However, advertising, which forms a major part of total revenues, continues to be highly vulnerable to the economic conditions. Advertising revenues in the News and Information Services segment remained flat during the first quarter of fiscal 2018. This is because contributions from the buyouts of Australian Regional Media and Wireless Group, favorable foreign currency fluctuations and modest rise in digital advertising revenues were offset by sluggishness in the print advertising market and lower free standing insert revenues at News America Marketing.

Previously, management had highlighted that FOX SPORTS Australia is likely to struggle against higher costs during the second quarter due to the amortization of NRL rights throughout the year.

Analysts polled by Zacks anticipate revenues from News and Information Services division to decline marginally by 1%. However, revenues in Cable Network Programming and Digital Real Estate Services segments are expected to increase 10.6% and 13.6%, respectively. Book Publishing division is expected to register revenue growth of 1.5%.

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 a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) 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 a Zacks Rank #4 (Sell) and an Earnings ESP of -8.11%. This makes surprise prediction difficult.

Stocks with Favorable Combination

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:

World Wrestling Entertainment (WWE - Free Report) has an Earnings ESP of +2.56% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Activision Blizzard (ATVI - Free Report) has an Earnings ESP of +4.99% and a Zacks Rank #3.

Discovery Communications (DISCA - Free Report) has an Earnings ESP of +6.50% and a Zacks Rank #3.

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