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Oscars Success Drives These Mega Studio Stocks

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Academy Awards, better known as Oscars, used be as popular a television event as the Super Bowl. But this year’s Academy Awards saw a drop in viewership of 3 million compared to last year. However, analysts argue that last year’s releases like Black Panther and A Star is Born drew considerable viewership. Meanwhile, this year, niche films were selected and the best motion picture “Parasite” has been viewed by a comparatively lesser number of people.

Nevertheless, studio companies saw their shares scale north on the back of their film’s stunning success at the Academy Awards in Los Angeles. After all, such award wins boost investor confidence in the parent companies, which are anyhow doing well on fundamental strength.

Studios That Won Oscars

The South Korean studio, Barunson Entertainment & Arts Corp, saw its shares climb 19% following 2020’s Best Picture winner. In fact, Parasite won four major awards at the Oscars, including the Best Picture, Best Director, Best Original Screenplay and Best Foreign Language Film. Similarly, provider of Internet entertainment service Netflix, Inc. (NFLX - Free Report) entered this year’s Oscars with 24 nominations, and walked away with two wins. Laura Dern won the Best Supporting Actress for Marriage Story.

By the way, documentaries are something that Netflix has not gained expertise over. But this time, the story was quite different! American Factory, a documentary about an Ohio plant opened by a Chinese billionaire, won the Oscar for the Best Documentary.

Such wins will help Netflix lure and keep subscribers as the company continues to face challenges from rival services like Disney+ and Apple TV+. Netflix has always been known to win television awards. But now, the company has spent millions of dollars to win the prestigious Academy Awards, plus spent a further million on awards marketing campaigns. And it seems such initiatives have paid off well, as Netflix has two prizes to brag. Lest we forget, last year, Netflix won multiple Oscars out of 15 nominations. Roma clinched a win in the best foreign language category, while Alfonso Cuarón won for directing it.

Some skeptics may however say that Netflix’s debt overshadows the wins. Last year, the company announced plans to raise nearly $2 billion through bond sales in the United States and Europe. But the company’s shares continue to move north and it’s primarily because of massive growth witnessed overseas. Netflix’s strong content release, focus on originals across various genres and languages, and partnerships with telcos helped its stock scale north. So far this year, Netflix’s shares have gained 14.6%, more than the Broadcast Radio and Television industry’s rise of 4.3%.

 

Notably, Netflix posted impressive fourth-quarter revenue results, helping the streaming giant surpass $20 billion in revenues last year. Netflix reported fourth-quarter 2019 earnings of $1.30 per share that beat the Zacks Consensus Estimate by a whopping 150% and climbed 333.3% year over year. To top it, the Zacks Consensus Estimate for its current-year earnings moved up 10.2% over the past 60 days.

 

At the same time, the company’s expected earnings growth rate for the current year is 46.3% versus the industry’s projected decline of 2.2%. Netflix currently flaunts a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Coming back to the Oscars, Sony Pictures won four noteworthy awards, as did The Walt Disney Company (DIS - Free Report) . Meanwhile, Sony Corporation’s (SNE - Free Report) Once Upon a Time in Hollywood made Brad Pitt win the Best Supporting Actor award. The film also received one for best production design. The Best Costume Design award went to Little Women, while Hair Love scored a win for the Best Animated Short film.   

While the phenomenal success at the Oscars will boost viewership for Sony’s subsidiaries like Columbia Pictures and Sony Pictures, the company has itself made concerted efforts to attain a leaner organizational structure and enhance long-term growth. Execution of measures to realign its business portfolio, like withdrawing from the PC business and vending the battery business, has aided the Japanese firm.

Sony has reported encouraging third-quarter fiscal 2019 results wherein adjusted earnings and revenues increased year over year. Currently, the stock has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has climbed 8.4% over the past 60 days.

 

The company’s expected earnings growth rate for the next year is 9.3%, higher than the Audio Video Production industry’s projected increase of 0.6%. In fact, the company has outperformed the broader industry on a year-to-date basis (+3.2% vs + 0.5%).

 

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