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Tencent Music (TME) to Post Q1 Earnings: What's in Store?

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Tencent Music Entertainment Group (TME - Free Report) is set to report first-quarter 2019 results on May 13.

In the last reported quarter, the company’s diluted loss per American Depositary Shares (ADS) was RMB0.56 (8 cents). Revenues rallied 50.5% year over year to RMB5.40 billion ($785 million).

Tencent Music’s top line in the to-be-reported quarter is expected to benefit from expanding music library through new partnerships with global music labels.

As of Dec 31, 2018, the company’s music library included more than 30 million tracks from domestic and international music labels.

Moreover, Tencent Music’s strategy to produce more in-house content and its launch of live-streamed video talk shows and long-form audio content such as radio shows have been able to drive subscriber base.
 

 

Notably, Mobile MAU-online music and Mobile MAU-social entertainment grew 6.8% and 9.1% year over year, respectively, in fourth-quarter 2018. The momentum is expected to continue in the soon-to-be-reported quarter due to the aforesaid initiatives.

However, continued investments related to promotion and marketing, and higher content and revenue sharing fees are expected to hurt profitability in first-quarter 2019.

The Zacks Consensus Estimate for first-quarter 2019 revenues is pegged at $861.3 million. Moreover, the consensus mark for earnings has decreased a penny to 10 cents over the past 30 days.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Tencent Music has a Zacks Rank #2 but an Earnings ESP of -12.20%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat in their upcoming releases:

Agilent Technologies (A - Free Report) has an Earnings ESP of +1.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.    

Intuit (INTU - Free Report) has a Zacks Rank #2 and an Earnings ESP of +0.78%.

Target (TGT - Free Report) has an Earnings ESP of +0.7% and a Zacks Rank #2.

 

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