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21st Century Fox (FOXA) Q4 Earnings: Is a Beat in Store?

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Twenty-First Century Fox (FOXA - Free Report) is expected to release fourth-quarter fiscal 2018 results on Aug 8.

The company beat the Zacks Consensus Estimate in three of the trailing four quarters with an average positive surprise of 4.72%.

However, in the last reported quarter, the company delivered earnings of 49 cents per share that missed the Zacks Consensus Estimate of 52 cents and declined 9.3% from the year-ago period.

Net sales however outpaced the consensus mark in all the trailing four quarters but declined 2% year over year to $7.42 billion in the last reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings has increased 3.8% to 54 per share over the last seven days, indicating year-over-year surge of 50%. The consensus mark for revenues currently stands at $7.75 billion, implying year-over-year increase of 14.8%.

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

Disney- Comcast Battle for Fox’s Assets

Notably, a major bidding war was on between Comcast (CMCSA - Free Report) and Disney (DIS - Free Report) to buy a chunk of Fox’s entertainment and international assets. However, toward the end of June, Disney with a $71.3 billion offer received the approval of The Justice Department to acquire the assets under consideration.

Twenty-First Century Fox has agreed to sell Twentieth Century Fox, Fox Searchlight, Fox 2000, FX Networks, Fox Sports Regional Networks, Fox Networks Group International, Star India, and its interests in National Geographic Partners, Hulu, Sky, Tata Sky and Endemol Shine Group to Disney.

Moreover, Twenty-First Century Fox plans to spin-off Fox News Channel, Fox Business Network, Fox Broadcasting company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network (BTN) into a new “Fox”. The new company will also include Twenty-First Century Fox’s studio lot in Los Angeles and equity investment in Roku.

Additionally, the company is bidding against Comcast for the remaining shares of Sky Plc. Notably, Comcast increased the bid in July valuing Sky at $34 billion. Twenty-First Century Fox’s previous offer valued the company at around $32.5 billion. Nevertheless, Twenty-First Century Fox has announced an “increased recommended pre-conditional cash offer” for Sky.

Other Factors to Consider

Twenty-First Century Fox’s Cable Network Programming segment is expected to benefit from rise in retransmission and robust advertising demand for its live content and entertainment product.

Fox Network strength, high viewership of the business channel, long-term sports rights, and expanding portfolio of regional sports channels are key catalysts for the company.

However, delay in acquiring the remaining stake at Sky Plc can dampen Fox’s growth prospects. Additionally, increasing Cable Network Programming costs and unfavorable foreign currency exchange are primary headwinds.

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.

We believe that Twenty-First Century Fox is likely to deliver a positive earnings surprise in the fourth quarter due to a favorable combination of a Zacks Rank #3 and an Earnings ESP of +1.21%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

A Stock That Warrants a Look

Here is a stock that you may want to consider as our model shows it has the right combination of elements to deliver an earnings beat in its upcoming release.

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.

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