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Is a Beat in Store for AMC Networks (AMCX) in Q4 Earnings?

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AMC Networks (AMCX - Free Report) is slated to report fourth-quarter 2017 financial numbers on Mar 1, before the opening bell.

The Zacks Consensus Estimate for revenues is pegged at $729.6 million. The Zacks Consensus Estimate for earnings is pegged at $1.49 per share, indicating year-over-year growth of 14.6%.

The company has a positive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in all the previous four quarters, with an average beat of 21.9%

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 estimates because it has the right combination of the two key elements.

Zacks ESP: AMC Networks has an Earnings ESP of +4.80%. This is because the Most Accurate estimate is pegged at $1.56 per share while the Zacks Consensus Estimate is pegged at $1.49. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AMC Networks has 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, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of AMC Networks’ favorable Zacks Rank and positive ESP indicates a likely positive surprise.

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 Results?

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

AMC Networks’ strength lies in programs with original content for which it holds ownership rights. Shows like Breaking Bad and Mad Men have been major hits, driving commercial success for the company. However, one of the biggest drags for the company is that its network is entirely dependent on The Walking Dead franchise.

The eighth season of The Walking Dead series was ranked as the  #1 television show on television with 15-million total viewers and 9.3-million 25-54 adults. AMC Networks is also boosting its regional growth in key markets with channel launches and new distribution deals with key pay-TV operators in Latin America, Central and Eastern Europe, Iberia and Africa to serve audiences with programs from multiple genres.

However, AMC Networks has not performed well in the past three months. Shares of AMC Networks have returned 1.7% but failed to beat the industry’s growth of 23.3%.

 

Additionally, serious competitive threats from over-the-top (OTT) online video streaming service providers and other media companies may mar the quarter’s performance. The recent trend of the bulk of ad revenues skewed toward Internet TV is a concern as well. AMC Networks competes in 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) to name a few.

Another Key Pick

Here is a company from the broader Consumer Discretionary sector—  of which AMC Networks is a part that has the right combination of elements to post an earnings beat this quarter.

The Walt Disney Company (DIS - Free Report) is expected to release second-quarter fiscal 2018 results on May 8. The company has an Earnings ESP of +1.13% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings beat the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 4.73%.

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