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Here's Why News Corporation (NWSA) Q4 Earnings May Decline

News Corporation NWSA is scheduled to report fourth-quarter fiscal 2019 numbers on Aug 8, after the market closes. This diversified media conglomerate has outperformed the Zacks Consensus Estimate in all the trailing four quarters.

In the last reported quarter, the company surpassed the consensus mark by a wide margin.  Let’s see how the company is positioned ahead of the upcoming quarterly results.

Estimates Look Dull

The Zacks Consensus Estimate for the fourth quarter is pegged at 2 cents, indicating a significant decline from 8 cents in the year-ago period. The consensus mark has moved south by a penny over the past 30 days.

The consensus mark for revenues is pegged at $2,490 million, suggesting a decline of 7.5% from the year-ago quarter’s figure.

News Corporation Price, Consensus and EPS Surprise

News Corporation Price, Consensus and EPS Surprise

News Corporation price-consensus-eps-surprise-chart | News Corporation Quote

Factors Distressing News Corporation’s Performance

News Corporation is witnessing falling advertising revenues at the News and Information Services segment owing to softness in the print advertising market, lower home delivered revenues and headwinds related to foreign currency. Advertising revenues fell 9% year over year in the third quarter. Moreover, management expects advertising performance at News and Information Services segment during the fourth quarter to remain relatively similar to the fiscal third-quarter rate.

Also, increased operating expenses, rise in SG&A expenses and higher interest expense have been denting the company’s performance. Any deleverage in operating costs and SG&A expenses may act as deterrent to the bottom line.

Can Strategies Offer Sufficient Respite?

News Corporation's efforts such as cost cutting, digital offerings and emphasis on real estate services bode well. Also, the company is diversifying its revenue streams through acquisitions and operational enhancement. It is also concentrating on augmenting its digital subscriber base. News Corporation remains on track to boost higher penetration of digital paid subscription driven by digital advertising solutions and cost initiatives, especially in Australia and at News UK.

What Our Model Says

Our proven model does not conclusively show that News Corporation is likely to beat estimates during fourth-quarter fiscal 2019. A stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

News Corporation has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post earnings beat.

Viacom Inc. VIAB has an Earnings ESP of +2.08% and a Zacks Rank #3.

BrightView Holdings, Inc. BV has an Earnings ESP of +0.86% and a Zacks Rank #2.

Rent-A-Center, Inc. RCII has an Earnings ESP of +3.88% and a Zacks Rank #3.

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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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