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Will CBS Corp. (CBS) Surprise Investors with Q4 Earnings?

CBS CorporationCBS is slated to report fourth-quarter 2015 results on Feb 11, after the closing bell. In the last quarter, the company had delivered a positive earnings surprise of 8.6%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

CBS Corp. has outperformed the Zacks Consensus Estimate by an average of 3.9% over the past four quarters. Further, in the third-quarter earnings release, management appeared positive about its future performance, based on the strength noted in network advertising, accelerated non-advertising revenue growth and inventory position. The company expects sustained increases in subscription revenue from CBS Corp.'s in-house services as well as external distribution partners. The commencement of several new prime time shows and the return of hit series, along with NFL and Super Bowl 50, drive further optimism.

The company remains confident owing to all the aforementioned factors. However, the media industry is highly competitive and CBS Corp. faces intense competition from other broadcast radio and television stations; cable television networks; motion picture studios; and outdoor advertisers in the markets where it operates. This may weigh on the company's top-line results.

Earnings Whispers

Our proven model does not conclusively show that CBS Corp. is likely to beat earnings 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. This is not the case here, as you will see below:

Zacks ESP: CBS Corp. has an Earnings ESP of -3.23%. This is because the Most Accurate estimate of 90 cents stands below the Zacks Consensus Estimate of 93 cents.

Zacks Rank: CBS Corp.'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.

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.

Stocks That Warrant a Look

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

Lowe's Companies, Inc. LOW has an Earnings ESP of +5.09% and a Zacks Rank #2 (Buy).

Dean Foods Company DF has an Earnings ESP of +5.88% and a Zacks Rank #3.

The Home Depot, Inc. HD has an Earnings ESP of +0.91% and a Zacks Rank #3.

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CBS CORP (CBS): Free Stock Analysis Report

HOME DEPOT (HD): Free Stock Analysis Report

LOWES COS (LOW): Free Stock Analysis Report

DEAN FOODS CO (DF): 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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