Paramount Global PARA is scheduled to report its fourth-quarter 2024 results on Feb. 26.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 10 cents per share, indicating a 16.67% increase in the past 60 days. The figure indicates a 150% surge from the year-ago quarter’s reported figure.
The consensus mark for revenues is pegged at $8.14 billion, indicating a 6.59% increase from the year-ago quarter’s reported figure.
PARA’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 163.06%
Let us see how things are shaping up for the upcoming announcement.
Paramount Global Price and EPS Surprise
Paramount Global price-eps-surprise | Paramount Global Quote
Factors to Consider
Paramount Global’s streaming service, Paramount+, added 3.5 million new subscribers in the third quarter, bringing its total to 72 million. Significant subscriber growth is expected to be seen in the fourth quarter as well, as a result of a strong slate of returns of big-hit series and new originals added to the streaming platform in the to-be-reported quarter. In addition, the fourth quarter follows the record-setting NFL season, as well as the launch of Paramount’s new primetime schedule on CBS, both of which are expected to have driven viewership and subscription revenues, impacting the top line positively in the quarter under review.
Despite continued top-line growth and subscriber gains from the company’s DTC segment, higher content expenses in the fourth quarter, given the timing of sports and some of the streaming originals, are expected to have put pressure on the bottom line in the to-be-reported quarter. There is also some shift in marketing expenses from the third quarter to the fourth quarter, which is expected to have impacted the bottom line negatively in the quarter under review. However, this impact is short term and profitability is expected to be achieved in 2025.
In the third quarter, total advertising increased 2%, impacted by the DTC segment, which delivered an 18% advertising growth. A double-digit DTC advertising growth is expected to be seen in the fourth quarter as well, as there will be a significant increase in political advertising, along with the return of NFL and College Football. The fourth quarter has consistently been the strongest for advertising each year, which is likely to be seen this year as well. This is expected to benefit the top line, despite having less sports inventory in the present year compared to the year before.
Paramount Global, as part of its cost savings initiative, made restructuring payments by reducing its U.S. workforce by 15%. As a result of approximately $150 million of cash restructuring payments and increased content spend in the fourth quarter, the free cash flow is expected to be negative. However, $500 million of proceeds from the equity interest in Viacom18 is expected to close in the fourth quarter, which is likely to have positively impacted the bottom line in the quarter under review.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not exactly the case here.
Paramount Global currently has an Earnings ESP of -14.43% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Stocks to Consider
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:
TKO Group Holdings, Inc. TKO currently has an Earnings ESP of +68.89% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
TKO shares have surged 88.1% in the trailing 12 months. It is set to report its fourth-quarter 2024 results on Feb. 26.
IonQ IONQ currently has an Earnings ESP of +35.14% and a Zacks Rank #3.
IONQ shares have skyrocketed 182.4% in the trailing 12 months. It is slated to report its fourth-quarter 2024 results on Feb. 26.
Opera Limited OPRA has an Earnings ESP of +8.70% and a Zacks Rank #3 at present.
OPRA shares have jumped 76.8% in the trailing 12 months. Opera Limited is scheduled to report its fourth-quarter 2024 results on Feb. 27.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
