Time Warner Inc
. (
TWX
), the diversified media conglomerate, is slated to report its
fourth-quarter 2011 financial results on February 8, 2012. The
current Zacks Consensus Estimate for the quarter is 87 cents per
share, representing an annualized increase of 29.9%. Revenue, as
per the Zacks Consensus Estimate, is $8.1 billion.
Third-Quarter Synopsis
Time Warner's third quarter earnings of 79 cents per share beat
the Zacks Consensus Estimate of 75 cents, and surged 27% from 62
cents earned in the prior-year quarter on the heels of the box
office success of "Harry Potter and the Deathly Hallows: Part 2" by
Warner Brothers, higher television advertising demand and increase
in television license fees.
Including one-time items, earnings came in at 78 cents per
share, reflecting a steep rise from 46 cents in the year-ago
quarter.
Time Warner, which competes with
News Corporation
(
NWSA
) and
Walt Disney Company
(
DIS
), registered an increase of 11% in total revenue to $7.1 billion
from the prior-year quarter, reflecting growth across Networks and
Filmed Entertainment segments. Also, revenue for the quarter
handily surpassed the Zacks Consensus Estimate of $7 billion.
Agreement of Estimate Revisions
Of the 27 analysts covering the stock, 2 analysts revised
estimates upwards in the last 30 days, while 3 moved in the
opposite direction.
In the last 7 days, 1 analyst revised the estimates in the
upward direction, while none of the analysts revised their
estimates downwards.
Magnitude of Estimate Revisions
Despite of the estimate revisions, the Zacks Consensus estimate
remained stable over the period of last 30 days.
Positive Earnings Surprise History
With respect to earnings surprises, Time Warner has topped the
Zacks Consensus Estimate over the last four quarters in the range
of 1.8% to 8.1%. The average remained at 5.6%, indicating that the
company has outperformed the Zacks Consensus Estimate by the same
magnitude in the trailing four quarters.
Our Take
The company has been expanding its digital presence to
facilitate consumers to enjoy contents in more platforms and
devices. Time Warner has enhanced the reach of HBO GO streaming
service to mobile devices and entered into a deal with Apple so
that the print subscribers of
Time
,
Fortune
and
Sports Illustrated
may access the iPad editions of these magazines at no additional
cost.
Further, Warner Bros. became the first movie studio to offer
video on demand, and acquired Flixster, a movie search application
on smartphones and mobile devices.
Moreover, Time Warner's significant international presence has
helped broaden its client base and product portfolio. Time Warner
operates in the United Kingdom, Germany, Canada, France, Japan and
other countries apart from the United States. We believe that its
strong international exposure will drive growth in the coming
quarters.
However, the significant potential risk is the company's high
dependence on advertising revenue, which we believe will remain
under pressure given the ongoing economic upheaval.
Currently, we have a long-term Neutral rating on the stock.
Moreover, Time Warner has a Zacks #3 Rank, which translates into a
short-term Hold recommendation
DISNEY WALT (
DIS
): Free Stock Analysis Report
NEWS CORP INC-A (
NWSA
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TIME WARNER INC (
TWX
): Free Stock Analysis Report
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