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Factors to Consider Ahead of CBS Corp's (CBS) Q2 Earnings

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CBS Corporation is set to release second-quarter 2019 results on Aug 8.

The company’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters, the average negative surprise being 0.04%.

In the last reported quarter, earnings of $1.37 per share missed the Zacks Consensus Estimate by a penny.

Revenues increased 10.8% from the year-ago quarter to $4.17 billion, owing to the success of Super Bowl LIII. However, the figure missed the consensus mark of $4.3 billion.

The Zacks Consensus Estimate for second-quarter revenues is currently pegged at $3.71 billion, indicating 7% growth from the figure reported in the year-ago quarter.

Moreover, the Zacks Consensus Estimate for earnings stands at $1.13, couple of cents down over the past 30 days, suggesting growth of almost 1% from the year-ago quarter’s reported figure.
 

CBS Corporation Price and EPS Surprise

CBS Corporation Price and EPS Surprise

CBS Corporation price-eps-surprise | CBS Corporation Quote

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

Factors to Watch

CBS’ strong over-the-top (OTT) content slate along with the broadcast of popular events on its Television Network might positively impact its second-quarter 2019 top line.

The content strength of the company’s OTT services — CBS All Access and Showtime — is expected to boost subscriber growth, thereby driving ad revenues in the to-be-reported quarter.

Notably, The Twilight Zone, released on April 1, was the most-watched original premiere on CBS All Access. The company has renewed the show for a second season.

Moreover, Showtime released City on a Hill on Jun 16, which is a crime drama starring Kevin Bacon. Matt Damon and Ben Affleck are the executive producers of the show.

CBS’ content strength is also evident from the fact that it is increasingly licensing its content to streaming platform’s like Netflix (NFLX - Free Report) and Amazon. Notably, CBS produced series, Dead to Me, was available on Netflix’s platform during the to-be-reported quarter. Additionally, the company’s increasing content licensing activities are likely to drive revenues in the second quarter.

Moreover, Disney is buying content (Diary of a Female President) from CBS TV Studios for its upcoming streaming service, Disney+, to cater to consumer demand. Further, CBS All Access and Showtime are also part of Apple’s upcoming streaming service Apple TV+.

Additionally, CBS and TEGNA inked a multi-year deal that renewed station affiliation agreements for 11 TEGNA markets nationwide, including two top 10 markets — Washington, D.C. and Houston, TX. These 11 markets cover 10% of the U.S. audience and nearly 11 million households.

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.

CBS has a Zacks Rank #3 and an Earnings ESP of -0.17%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Viacom has an Earnings ESP of +2.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMC Entertainment (AMC - Free Report) has an Earnings ESP of +15.29% and a Zacks Rank #3.

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