Can Viacom (VIAB) Surprise This Earnings Season? - Analyst Blog
Media and film producing company, Viacom Inc. ( VIAB ), is set to release second-quarter fiscal 2014 results before the opening bell on May 1, 2014.
In the previous quarter, the company's earnings topped the Zacks Consensus Estimate by a margin of 4.35%. Let's see how things are shaping up for this announcement.
Factors to Influence This Quarter
Continuous improvement in viewership ratings and renewal of the multi-platform deal with Time Warner Cable are likely to drive both advertisement and affiliate revenues. Moreover, increased investment in network and content expansion along with deals with video streaming companies may bolster Viacom's top line, going forward.
Viacom benefits from a well-balanced asset mix with entertainment content at its core. The company enhanced its brands worldwide through the creation and acquisition of hit programming, new channels, successful motion pictures, and other forms of entertainment, including video game offerings.
On the tepid side, rising distribution expenses coupled with an uncertain movie business will continue to hinder growth for the company while moving ahead. The U.S. cable TV industry is highly matured and saturated. Viacom's flagship cable channels are well-distributed which limits the scope to increase revenue by enlarging distribution channels. This hints at the company's need to improve its cable channel ratings to boost top line.
Our proven model does not conclusively show that Viacom is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.04, thus resulting to an ESP of 0.00% for Viacom.
Zacks Rank #3 (Hold): Viacom's Zacks Rank #3 increases the predictive power of ESP, but when combined with a 0.00% ESP, it makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
The Walt Disney Co. ( DIS ) with Earnings ESP of +1.03% and Zacks Rank #2 (Buy).
RigNet, Inc. ( RNET ) with Earnings ESP of +11.11% and Zacks Rank #3.
Cablevision Systems Corp. ( CVC ) with Earnings ESP of +100% and Zacks Rank #3.
CABLEVISION SYS (CVC): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
RIGNET INC (RNET): Free Stock Analysis Report
VIACOM INC-B (VIAB): Free Stock Analysis Report
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