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Viacom (VIAB) to Report Q3 Earnings: Will it Beat Estimates?

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Viacom (VIAB - Free Report) is slated to report third-quarter fiscal 2018 results on Aug 9.

Notably, Viacom beat the Zacks Consensus Estimate in three of the trailing four quarters, with an average positive earnings surprise of 6.36%. In the last reported quarter, the company’s adjusted earnings beat the Zacks Consensus Estimate by 12 cents.

Viacom’s top line also beat the consensus mark in three of the trailing four quarters. In the last reported quarter, revenues came in at $3.15 billion, beating the Zacks Consensus Estimate of $3.04 billion but down 3.3% from the year-ago quarter.

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

Key Factors

Shares of Viacom have lost 4.4% on a year-to-date basis while the industry rose 2.8% over the same period. The decline can be attributed to growing competition from other video-service providers.




 

Moreover, projections for third-quarter fiscal 2018 look far from encouraging. The Zacks Consensus Estimate for third-quarter earnings of $1.07 indicates a decline of 8.6% year over year. The consensus estimate for sales is pegged at $3.27 billion, indicating year-over-year decline of 2.8%.

Viacom is likely to be hurt by continuing weak affiliate revenues in the United States owing to loss of subscribers. The Zacks Consensus Estimate for third-quarter fiscal 2018 affiliate revenues is pegged at $1.16 billion, implying a decrease of 2.2% on a year-over-year basis.

Increasing competition from video streaming service companies like Netflix (NFLX - Free Report) , and Amazon (AMZN - Free Report) that are investing heavily to produce original content and to acquire more subscribers is a significant concern for the company’s growth.

However, Viacom’s Paramount Pictures’ release of A Quiet Place in third-quarter fiscal 2018 is expected to contribute to top-line. Notably, A Quiet Place is Paramount’s biggest opener since 2016 and second biggest domestic opener in 2018.

Additionally, the company is expected to benefit from its strong performance on the international front, given the significant room for growth due to lower Pay-TV penetration (40%) compared with the United States (80%).

In the last reported quarter, Viacom’s international revenues increased 18% year over year to $566 million, offsetting domestic revenue decline of 3%.

Revenues from Advanced Marketing Solutions (AMS) and Virtual Multichannel Video Programming Distributor (vMVPDs) are also expected to improve in third-quarter fiscal 2018.

Viacom Inc. Price and EPS Surprise

Viacom Inc. Price and EPS Surprise | Viacom Inc. Quote

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.

Viacom has a Zacks Rank #3 and an Earnings ESP of +0.48. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Another Stock to Consider

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

Penn National (PENN - Free Report) has an Earnings ESP of +1.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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