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Discovery (DISCA) Q2 Earnings to Gain on Portfolio Strength

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Discovery (DISCA - Free Report) is scheduled to report second-quarter 2018 results on Aug 7.

In the last reported quarter, the company delivered a positive earnings surprise of 17.78%.  Revenues surged 43% year over year to $2.31 billion.

The Zacks Consensus Estimate for second-quarter earnings has remained steady at 84 cents over the last seven days, reflecting year-over-year growth of 23.5%. The consensus mark for revenues currently stands at $2.85 billion, reflecting year-over-year growth of almost 63.5%.

Let’s see how things are shaping up for this announcement.

U.S. & International Networks’ Top-Line to Grow

Discovery's buyout of Scripps is a positive for the company as its product portfolio has widened significantly. Also, this buyout will help the company strengthen its foothold internationally.


The combined entity is likely to produce around 8,000 hours of original programming content on a yearly basis, reaching fans across 220 countries and territories, in 50 different languages.

Moreover, the combined entity is anticipated to generate 7 billion short-form video streams per month, expanding its presence across new video and social media platforms.

Post Scripps Networks’ addition, Discovery is expected to have nearly 20% of ad-supported pay-TV audiences’ share in the United States.

Further, robust performance is anticipated from Oprah Winfrey Network (“OWN”), Animal Planet, HGTV, Investigation Discovery and TLC.

The U.S. Networks division is projected to perform well in the second quarter, consequently driving top-line growth. The Zacks Consensus Estimate for U.S. Networks revenues is pegged at $1.70 billion, much higher than $890 million reported in the year-ago quarter.

Moreover, the International Networks division is expected to put on a robust performance. The Zacks Consensus Estimate currently stands at $1.14 billion, much higher than $811 million reported in the year-ago quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) 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.

Discovery is likely to deliver a positive earnings surprise in the second quarter due to a favorable combination of a Zacks Rank #3 and an Earnings ESP of +1.73%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are three stocks that you may want to consider as our model shows these too have the right combination of elements to deliver an earnings beat in the to-be reported quarter.

Vishay Intertechnology (VSH - Free Report) has an Earnings ESP of +2.41% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zillow Group (ZG - Free Report) has an Earnings ESP of +15.38% and a Zacks Rank #2.

CyberArk (CYBR - Free Report) has an Earnings ESP of +3.38% and a Zacks Rank #2.

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