The first-quarter 2018 earnings season has commenced on a better note than the preceding one. Per the latest Earnings Preview, “the earnings and revenue growth rates and the proportion of positive earnings surprises are tracking materially above historical periods.”
As of Apr 20, 87 S&P 500 members have reported quarterly numbers. Total earnings of these companies are up 25% on a year-over-year basis (82.8% of the companies beat EPS estimates) while total revenues are up 10.7% on a year-over-year basis (67.8% of the companies beat top-line estimates).
Overall first-quarter earnings for S&P 500 companies are anticipated to be up 18.3% from the year-ago quarter on revenues that are estimated to increase 7.7%. This would be better than growth of 13.4% in fourth-quarter earnings on 8.6% higher revenues.
Growth is expected to be broad-based, with double-digit earnings improvement expectation for 11 out of the 16 Zacks Sector. Apart from Finance and Technology, Energy sector is estimated to be a big contributor (earnings likely to surge 59.6% on 15.9% higher revenues).
Consumer Discretionary is one of the five sectors that are expected to report single-digit earnings growth. The sector, which primarily comprises retail stocks, has been plagued by ever expanding presence of Amazon (AMZN - Free Report) .
Media also forms a significant part of the sector. The industry has been suffering from relentless cord-cutting and stiff competition from streaming services like Netflix (NFLX - Free Report) , Hulu, HBO and Amazon Prime.
Here we take a look at three media companies that are set to report on Apr 25.
Viacom’s (VIAB - Free Report) second-quarter fiscal 2018 results are expected to be driven by strong international growth due to expanding market share in Latin America and India. Moreover, management expects domestic ad revenues to improve sequentially in the second quarter.
However, Viacom is likely to be hurt by weak affiliate revenues in the United States owing to loss of subscribers. (Read More: Viacom Q2 Earnings to Gain from International Growth)
Moreover, Viacom has a favorable combination of a Zacks Rank #2 (Buy) and an Earnings ESP of +0.77%, which shows that the company is likely to deliver a positive surprise this quarter.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The sell-rated stocks (Zacks Rank #4 or 5) are best avoided.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Meanwhile, Comcast’s (CMCSA - Free Report) first-quarter 2018 results are expected to be driven by solid subscriber gain under the Xfinity Mobile platform.
The company continues to add new features like the voice remote (more than 20 million currently deployed) and has integrated YouTube, Pandora and iHeartRadio. These features are likely to improve customer engagement, consequently benefiting top-line growth.
However, we remain concerned about the company’s operation in a saturated and competitive multi-channel U.S. video market. Comcast lost 33,000 video customers and 13,000 voice customers in the fourth-quarter 2017, due to cord-cutting and stiff competition. (Read More: What's in the Offing for Comcast in Q1 Earnings?)
Further, Comcast has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of -0.28%.
We also expect healthy net subscriber addition to drive Sirius XM’s (SIRI - Free Report) first-quarter 2018 results. Moreover, the company’s improving position in the automotive market is a key catalyst.
However, the company’s high-debt level is a concern. Moreover, increased leverage along with stiff competition might act as headwinds for the company in the to-be-reported quarter. (Read More: Sirius XM to Report Q1 Earnings: What's in Store?)
Additionally, Sirius has an unfavorable combination of a Zacks Rank #4 (Sell) and an Earnings ESP of -2.78%.
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