It has been about a month since the last earnings report for Discovery Communications, Inc. . Shares have lost about 16.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is DISCA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth Quarter Results
The company’s earnings (excluding $2.46 from non-recurring items) of 47 cents per share surpassed the Zacks Consensus Estimate of 39 cents. The bottom line, however, declined 9.6% on a year-over-year basis owing to higher costs.
Discovery’s fourth-quarter revenues of $1,864 million improved 11.5% on a year-over-year basis. Also, the top line outpaced the Zacks Consensus Estimate of $1,783 million. In fact, revenue growth was witnessed across all major divisions of the company. Quarterly adjusted operating income before depreciation and amortization (OIBDA) increased 10% year over year.
Performance Details
Revenues from Discovery’s U.S. Networks division rose 10% to $892 million. Segmental growth was driven by 7% and 8% growth in distribution and advertising revenues, respectively.
Distribution revenues came in at $402 million compared with $375 million a year ago. Higher affiliate fee rates contributed to the increase. However, total portfolio subscribers decreased 5% while subscribers of the company’s fully distributed networks declined 3% in the quarter.
Advertising revenues came in at $456 million compared with $421 million a year ago. Revenues from other sources increased to $34 million from $16 million in the previous year. The substantial improvement was primarily owing to Discovery's joint venture with TEN for automotive media. Also, adjusted OIBDA was up 7% year over year at the segment. On the contrary, adjusted OIBDA margin declined to 54% from 55% a year ago.
International Networks revenues rose 13% to $927 million. While Distribution revenues in the segment improved 15% to $479 million, advertising revenues increased 11% to $419 million. Revenues from other sources were up significantly on a year-over-year basis to $29 million. Adjusted OIBDA margin slid to 27% from 28% a year ago.
Revenues from the Education and Other division increased 10% to $45 million. This upside was primarily owing to increased International and digital textbook revenues at Education.
Liquidity
The company exited 2017 with cash and cash equivalents of $7,309 million and $14,755 million of debt (non-current portion) compared with $300 million and $7, 841 million, respectively, at the end of 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
VGM Scores
At this time, DISCA has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.
Outlook
DISCA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Image: Bigstock
Discovery (DISCA) Down 16.7% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Discovery Communications, Inc. . Shares have lost about 16.7% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is DISCA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fourth Quarter Results
The company’s earnings (excluding $2.46 from non-recurring items) of 47 cents per share surpassed the Zacks Consensus Estimate of 39 cents. The bottom line, however, declined 9.6% on a year-over-year basis owing to higher costs.
Discovery’s fourth-quarter revenues of $1,864 million improved 11.5% on a year-over-year basis. Also, the top line outpaced the Zacks Consensus Estimate of $1,783 million. In fact, revenue growth was witnessed across all major divisions of the company. Quarterly adjusted operating income before depreciation and amortization (OIBDA) increased 10% year over year.
Performance Details
Revenues from Discovery’s U.S. Networks division rose 10% to $892 million. Segmental growth was driven by 7% and 8% growth in distribution and advertising revenues, respectively.
Distribution revenues came in at $402 million compared with $375 million a year ago. Higher affiliate fee rates contributed to the increase. However, total portfolio subscribers decreased 5% while subscribers of the company’s fully distributed networks declined 3% in the quarter.
Advertising revenues came in at $456 million compared with $421 million a year ago. Revenues from other sources increased to $34 million from $16 million in the previous year. The substantial improvement was primarily owing to Discovery's joint venture with TEN for automotive media. Also, adjusted OIBDA was up 7% year over year at the segment. On the contrary, adjusted OIBDA margin declined to 54% from 55% a year ago.
International Networks revenues rose 13% to $927 million. While Distribution revenues in the segment improved 15% to $479 million, advertising revenues increased 11% to $419 million. Revenues from other sources were up significantly on a year-over-year basis to $29 million. Adjusted OIBDA margin slid to 27% from 28% a year ago.
Revenues from the Education and Other division increased 10% to $45 million. This upside was primarily owing to increased International and digital textbook revenues at Education.
Liquidity
The company exited 2017 with cash and cash equivalents of $7,309 million and $14,755 million of debt (non-current portion) compared with $300 million and $7, 841 million, respectively, at the end of 2016.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
Discovery Communications, Inc. Price and Consensus
Discovery Communications, Inc. Price and Consensus | Discovery Communications, Inc. Quote
VGM Scores
At this time, DISCA has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.
Outlook
DISCA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.