Tencent Holdings (TCEHY - Free Report) is set to report second-quarter 2019 results on Aug 14.
In the last reported quarter, the company reported earnings of 32 cents per share that missed the Zacks Consensus Estimate by a penny.
Revenues of $12.66 billion lagged the consensus mark of $13.19 billion.
The Zacks Consensus Estimate for second-quarter earnings has been steady at 35 cents over the past 30 days. The consensus mark for revenues currently stands at $13.34 billion, indicating growth of 15.4% from the figure reported in the year-ago quarter.
Let’s see how things are shaping up for this announcement.
Key Factors to Watch
Tencent has a rich gaming portfolio, which along with a strong distribution capability is expected to drive growth. The company derived almost 33.3% of revenues from online games in the last reported quarter.
Nevertheless, strong adoption of role-playing games (RPG) such as Free Fantasy Online, MT4 and Saint Seiya, which generate higher average revenue per user (ARPU), is expected to boost gaming revenues in the to-be-reported quarter. Further, continuing momentum for Honor of Kings and Perfect World mobile is a key catalyst.
Moreover, growth in digital content revenues, owing to video streaming subscriptions and live broadcast services, is expected to boost social networks revenues.
Further, momentum in cloud services is expected to continue owing to fast penetration into key sectors, including finance, Smart Retail and municipal services. This is expected to drive FinTech and Business Services revenues in the to-be-reported 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.
Tencent has a Zacks Rank #3 and an Earnings ESP of +2.40%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a couple of companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:
CACI International (CACI - Free Report) has an Earnings ESP of +4.02% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cisco Systems (CSCO - Free Report) has an Earnings ESP of +0.41% and a Zacks Rank #3.
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