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Time Warner (TWX) Q2 Earnings: Should You be Cautious? - Analyst Blog

Time Warner Inc.TWX , the media and entertainment company, is expected to report second-quarter 2015 results before the market opens on Aug 5. The big question facing investors now is, whether the company will be able to continue with its positive earnings surprise streak in the quarter to be reported.

In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average of 15%. Here's a discussion on the determinants of the second-quarter results:

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Time Warner is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Time Warner has an Earnings ESP of -0.97% as the Most Accurate estimate stands at $1.02, while the Zacks Consensus Estimate is pegged at $1.03.

Moreover, the Zacks Consensus Estimate has tumbled roughly 3% over the past 90 days. Time Warner's Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Factors Influencing This Quarter

We believe Time Warner's initiatives such as foray into new markets and digital endeavors augur well for its operating performance. However, management had earlier cautioned that bottom-line growth may decelerate sharply in the second quarter due to ongoing foreign currency headwinds. Nevertheless, we believe that the company's investments in programming, production and marketing, coupled with its focus on operating and capital efficiencies, bode well.

Stocks Poised to Beat Earnings Estimates

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

Guess' Inc. GES has an Earnings ESP of +6.67% and a Zacks Rank #1 (Strong Buy).

Dean Foods Co. DF has an Earnings ESP of +3.85% and a Zacks Rank #2 (Buy).

The Walt Disney Co. DIS has an Earnings ESP of +2.16% and a Zacks Rank #3.

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TIME WARNER INC (TWX): Free Stock Analysis Report

DEAN FOODS CO (DF): Free Stock Analysis Report

DISNEY WALT (DIS): Free Stock Analysis Report

GUESS INC (GES): 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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