Technology

4 Media Stocks Set to Beat Estimates This Earnings Season

Media companies’ third-quarter 2020 results are likely to reflect increased media consumption over the Internet as people were compelled to stay home due to coronavirus-induced social distancing and lockdowns.

Moreover, higher spending on political advertising driven by the upcoming U.S. presidential election is a driver. Further, recovery in digital advertising is expected to have helped drive the top line on a sequential basis.

The rise in TV ad spending due to return of live sports like the NBA basketball season bodes well for media companies.

Nevertheless, persistent cord-cutting and stiff competition from SVOD and vMVPD services are expected to have hurt Comcast CMCSA and Charter Communications CHTR.

Industry Trends to Drive Growth

Media companies gain from several favorable industry trends. The industry is witnessing rapid evolution in alternative distribution channels for broadcast and cable programming.

Growing preference for digital and subscription services over linear pay television has compelled media companies to alter their business models.

Additionally, the growing demand for high-speed Internet is expected to have benefited the top line of industry participants like Comcast and Charter. Improving Internet speed is driving demand for high-quality video and the trend of binge viewing.

Furthermore, media companies are investing heavily in developing original and fresh content to remain competitive. Additionally, increasing availability of a variety of alternative packages at a lower cost than traditional offerings is expected to have aided subscriber growth.

How to Make the Right Pick?

With the existence of a number of industry players, finding the media stocks that have the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.

You could narrow down your choices by looking at stocks that have the perfect combination of two key elements: a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Earnings ESP is our proprietary methodology for determining stocks that have maximum chances of beating estimates at their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
 
Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.

Best Bets

Given below are four media stocks that have a favorable combination to beat on earnings this reporting cycle:

Canada-based Shaw Communications SJR is set to report third-quarter 2020 results on Oct 30. The company has an Earnings ESP of +17.86% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for earnings has moved up 12% to 28 cents per share over the past 30 days.

Shaw Communications Inc. Price and EPS Surprise

Shaw Communications Inc. Price and EPS Surprise

Shaw Communications Inc. price-eps-surprise | Shaw Communications Inc. Quote

New York-based Sirius XM Holdings SIRI has an Earnings ESP of +7.14% and a Zacks Rank of 2.

The company is scheduled to report third-quarter fiscal 2020 results on Oct 22. The consensus estimate for earnings has increased by a penny to 6 cents per share over the past 30 days.

Sirius XM Holdings Inc. Price and EPS Surprise

Sirius XM Holdings Inc. Price and EPS Surprise

Sirius XM Holdings Inc. price-eps-surprise | Sirius XM Holdings Inc. Quote

Another New York-based company ViacomCBS VIAC is scheduled to report third-quarter 2020 results on Nov 6.

The company has a Zacks Rank of 2 and an Earnings ESP of +16.36%.

ViacomCBS Inc. Price and EPS Surprise

ViacomCBS Inc. Price and EPS Surprise

ViacomCBS Inc. price-eps-surprise | ViacomCBS Inc. Quote

The Zacks Consensus Estimate for earnings has risen 11.9% to 75 cents per share over the past month.

Los Gatos, CA-based Netflix NFLX is set to report third-quarter 2020 results on Oct 20. The company has an Earnings ESP of +2.39% and a Zacks Rank #3.

The consensus estimate for earnings has moved up by a penny to $2.12 per share over the past 30 days.

Netflix, Inc. Price and EPS Surprise

Netflix, Inc. Price and EPS Surprise

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

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Comcast Corporation (CMCSA): Free Stock Analysis Report
 
Charter Communications, Inc. (CHTR): Free Stock Analysis Report
 
Sirius XM Holdings Inc. (SIRI): Free Stock Analysis Report
 
Netflix, Inc. (NFLX): Free Stock Analysis Report
 
Shaw Communications Inc. (SJR): Free Stock Analysis Report
 
ViacomCBS Inc. (VIAC): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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