Time Inc.TIME is slated to report fourth-quarter 2016 results on Feb 16, before the opening bell. In the last quarter, it reported in-line earnings of 31 cents. Let's see how things are shaping up prior to this announcement.
Zacks Model Shows Unlikely Earnings Beat
Our proven model does not conclusively show that Time Inc. is likely to beat estimates this quarter. This is because 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 may uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Time Inc. has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 76 cents. Moreover, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Time Inc. Price, Consensus and EPS Surprise
Factors Influencing this Quarter
Time Inc. has been focusing on the creation of digital properties and intends to increase digital advertising revenues by enhancing native branded content and video. Further, the company is concentrating on customization of data to aid advertisers target their audience more effectively. In this relation, the company acquired the assets of Viant. Management anticipates Viant to contribute over $100 million of digital advertising revenue in 2016. There has been a drastic change in audience preference due to which advertisers have shifted dollars to digital video. Management anticipates total revenue to be flat to down 1% in 2016.
We observe that total advertising revenue increased 5% during third-quarter 2016. Print and other advertising revenue fell 10%, while digital advertising revenue soared 63%. Time Inc. is targeting adjacent revenue opportunities, which include Live Media, SI Play, eCommerce and various other products. Time Inc. through acquisitions of inVNT, a company that specializes in live media and Bizrate Insights, an online survey and subscription marketing company, is expanding its digital presence.
For fourth-quarter 2016, management had earlier projected total revenue to be flat to down marginally. Time Inc. envisions advertising revenue to be up mid to high-single digits year over year and subscription revenue to decline by approximately 10% with newsstand revenue expected to be down about 20%. Operating expenses is anticipated to decline by low to mid-single digits.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dollar Tree, Inc. DLTR has an Earnings ESP of +0.75% and sports a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
Papa John's International, Inc. PZZA has an Earnings ESP of +4.55% and also carries a Zacks Rank #2.
Costco Wholesale Corporation COST has an Earnings ESP of +0.74% and carries a Zacks Rank #3.
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