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Media Stocks to Watch for Earnings on May 10: NWSA & AMCX

The earnings season is past its crescendo with decent performances across the table. Although various micro and macro issues have overshadowed the current reporting cycle to an extent, it is on track to record one of the best quarterly performance with earnings expected to be up 23.2% on revenue growth of 8.7%, per the Earnings Preview as of May 4, 2018. This is much higher than 13.4% earnings growth and 8.1% revenue growth recorded in Q4.

Per the article, 409 S&P 500 members have reported quarterly results. Well, 78% of these companies have delivered positive earnings surprises, while 75.6% beat top-line expectations. Earnings of these companies have increased 24% from the year-ago quarter, while revenues have risen 9.3%.

Our today's article revolves around two media stocks - News Corporation NWSA , a media and information services company and AMC Networks Inc. AMCX , which owns and operates various cable television's brands.

Few Facts About the Stocks

News Corporation belongs to the Film and Television Production and Distribution industry, which occupies the bottom 13% (223 out of 256) position in the Zacks Industry Rank . Notably, in the past six months, the stock has advanced roughly 8.4%, while the industry has rallied 17.7%.

Meanwhile, AMC Networks forms part of the Broadcast Radio and Television industry, which is ranked at the bottom 29% (183 out of 256). We observe that the stock has jumped 8.9% in the aforementioned time frame, while the industry has grown 28.1%.

We also note that both the industries form part of the Consumer Discretionary sector, which holds a bottom 13% (14 out of 16) position in the list of Zacks Sector Rank . Per the article, the sector is expected to record earnings growth of 13.2% and revenue increase of 6.9%.

That said, let's see what's in store for these two stocks when they release their quarterly results on May 10. Our research shows that for stocks with the combination of a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, the chance of a positive earnings surprise is as high as 70%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Will News Corp Continue With Earnings Beat Streak?

News Corporation, which is slated to report third-quarter fiscal 2018 results, has outperformed the Zacks Consensus Estimate by an average of 93.4% in the trailing four quarters. Investors are keeping their fingers crossed and hoping that the company will continue with its positive earnings surprise streak in the to-be-reported quarter as well. Let's analyze.

The company remains vulnerable to foreign currency headwinds and soft print advertising demand. Advertising revenues in the News and Information Services segment fell during the second quarter of fiscal 2018 due to soft home delivered revenues at News America Marketing, mainly attributable to two fewer free-standing inserts as well as lower custom publishing revenues. Also, softness in the print advertising market along with the decision to stop The Wall Street Journal's international print editions in the quarter impacted the results.

Nevertheless, News Corporation is diversifying its revenue streams through strategic acquisitions and operational enhancement. The company is expanding its digital offerings, emphasizing on real estate businesses and augmenting digital subscriber base. Further, it has been focusing on cost cutting. (Read more: Factors Setting the Tone for News Corp in Q3 Earnings).

Driven by the aforementioned factors, the consensus mark for earnings and revenues for the to-be-reported quarter are currently pegged at 7 cents and $1,978 million, respectively, and are flat compared with the year-ago quarter. Further, News Corporation has an unfavorable combination of a Zacks Rank #4 (Sell) and an Earnings ESP of -30.77%.

News Corporation Price, Consensus and EPS Surprise

News Corporation Price, Consensus and EPS Surprise | News Corporation Quote

What's the Probability of AMC Networks to Beat Earnings?

AMC Networks, which is slated to report first-quarter 2018 results, might find difficult to maintain its earnings beat streak. We note that the stock has an unfavorable combination of a Zacks Rank #4 and an Earnings ESP of -0.77%. Nevertheless, few bright spots can't be ignored.

In the preceding quarter, it had outperformed the Zacks Consensus Estimate by 12.8%. In the trailing four quarters, the stock has outpaced the Zacks Consensus Estimate by an average of 24.3%.

Further, earnings estimate revision unveils that the Zacks Consensus Estimate for the quarter under review has decreased by a penny in the last 30 days and is pegged at $2.17, reflecting an increase of 3.3% year over year. Analysts polled by Zacks now project revenues of $720.7 million, almost flat with the year-ago quarter.

AMC Networks Inc. Price, Consensus and EPS Surprise

AMC Networks Inc. Price, Consensus and EPS Surprise | AMC Networks Inc. Quote

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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AMC Networks Inc. (AMCX): Free Stock Analysis Report

News Corporation (NWSA): 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.


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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