Silver Spring, MD-based global mass media and entertainment
Discovery Communications, Inc.
) is slated to report its first-quarter 2014 financial results
before the opening bell on May 6, 2014.
Last quarter, the company had delivered a 4.55% positive
earnings surprise. Let's see how Discovery Communications is
positioned prior to the first quarter's announcement.
Factors to be Considered this Quarter
Robust revenue and viewership growth coupled with rating
improvement have encouraged Discovery Communications to raise its
guidance for 2014. The company has renewed its agreement with
Time Warner Cable to continue offering its content on the
latter's TVEverywhere platform. Such video streaming deals with
pay-TV operators should add a revenue stream for Discovery
Communications in the upcoming quarters.
Discovery Communications is a pure-play, non-fiction TV
content developer. The non-fiction media market is highly
competitive and as a leading player in this segment, Discovery
Communications faces fierce competition. The company's national
TV network competes with other broadcast and national TV networks
as well as with home video products and Internet usage for
viewers. However, the company is highly susceptible to changes in
distribution and viewing of TV channels.
On the flip side, massive growth of personal digital video
recorders (DVRs), video-on-demand technology, IPTV, smartphones
and tablets may completely change the TV viewing landscape, which
in turn may jeopardize the company's business model.
Our proven model does not conclusively show that Discovery
Communications is likely to beat earnings this quarter. This is
because a stock needs to have both a positive
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to
happen. Unfortunately, that is not the case here as elaborated
Negative Zacks ESP:
Earnings ESP represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate. This leads to an ESP
of -7.04% for Discovery Communications as the Most Accurate
estimate stands at 66 cents while the Zacks Consensus Estimate is
pegged higher at 71 cents.
Discovery Communications holds a Zacks Rank #4 (Sell) which
decreases the predictive power of the stock.
We caution investors against this stock going into the
earnings announcement, as a Zacks earnings ESP of -7.04% when
combined with a Zacks Rank #4, lowers the possibility of an
Other Stocks to Consider
Here are some companies worth considering as our model shows
these have the right combination of elements to post an earnings
beat this quarter:
), with earnings ESP of +21.43% and a Zacks Rank #2 (Buy).
The Walt Disney Company
), with earnings ESP of +1.03% and a Zacks Rank #2 (Buy).
Cablevision Systems Corporation
), with earnings ESP of +100.0% and a Zacks Rank #3 (Hold).
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