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Discovery (DISCA) to Report Q3 Earnings: What's in Store?

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Discovery (DISCA - Free Report) is set to report third-quarter 2019 results on Nov 7.

The Zacks Consensus Estimate for third-quarter 2019 earnings has been steady at 82 cents over the past 30 days. The figure indicates growth of 57.7% from the year-ago quarter’s reported figure.

The consensus mark for revenues, which is pegged at $2.68 billion, implies growth of 3.2% from the year-ago quarter’s reported figure.

For third-quarter 2019, Discovery expects U.S. advertising growth between 3% and 5%. Moreover, U.S. affiliate growth is anticipated to be 5%. Further, international advertising is expected to increase at least high-single digits. Additionally, international affiliate is expected to be up mid-single digits.

Notably, the company’s earnings missed the Zacks Consensus Estimate in three of the trailing four quarters, the average negative surprise being 3.9%.

In second-quarter 2019, adjusted earnings of 98 cents per share missed the Zacks Consensus Estimate by a penny. However, revenues increased 1.4% year over year to $2.89 billion and beat the consensus mark of $2.88 billion.

Discovery, Inc. Price and EPS Surprise

Discovery, Inc. Price and EPS Surprise

Discovery, Inc. price-eps-surprise | Discovery, Inc. Quote


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

Factors to Consider

Discovery’s third-quarter 2019 results are expected to have benefited from a strong content portfolio and an expanding international footprint post the Scripps Networks buyout.

The company’s expanded footprint in Europe, courtesy of TVN in Poland, Dplay in the Nordics and Joyn in Germany (Discovery’s joint venture with ProSieben), is expected to have aided the top line in the region. International revenues are expected to have benefited from a full-quarter revenue contribution by the U.K. TV Lifestyle business.

Moreover, revenues are expected to have benefited from domestic advertising growth, driven by improved ratings, healthy overall pricing and increase in TV Everywhere apps in the to-be-reported quarter.

Ratings are expected to have gained from the availability of shows like SERENGETI (nature documentary) and the new season of HGTV’s Flip or Flop.

Additionally, the top-line performance is expected to reflect solid monetization of digital assets and GOLFTV.

Further, the increasing availability of its content across linear, digital over-the-top platforms like Hulu, AT&T Watch, Sling and YouTube is expected to have improved the company’s competitive position in the streaming space and driven the top line.

However, the bottom-line performance is expected to reflect incremental spending on direct-to-consumer initiatives and International growth efforts in the to-be-reported quarter.

Also, unfavorable foreign exchange and intensifying competition in the Pay-TV market are expected to reflect on the company’s third-quarter results.

What Our Model Says

According to the Zacks model, a company with a positive Earnings ESP along with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates.

Although Discovery has a Zacks Rank #2, its Earnings ESP of -0.24% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

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

Activision Blizzard (ATVI - Free Report) has an Earnings ESP of +24.30% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

iHeartMedia (IHRT - Free Report) has an Earnings ESP of +3.17% and a Zacks Rank #2.

Fox Corporation (FOXA - Free Report) has an Earnings ESP of +2.97% and a Zacks Rank #3.

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