Viacom Inc. ( VIAB ) is set to release its fourth-quarter 2014 financial numbers before the opening bell on Nov 13.
In the last quarter, the company delivered a negative 1.39% earnings surprise. However, the company has delivered positive earnings surprises in three of the last four quarters, with an average beat of 3.61%. Let's see how things are shaping up for this announcement.
Factors to be Considered this Quarter
The cable TV industry in the U.S. is highly matured and saturated. Viacom's flagship cable channels are already well distributed and there is limited scope for driving revenues by expanding distribution channels. Moreover, online video streaming companies pose a major threat to cable TV operators, who may not be able to pay higher affiliate fees to Viacom since its content can be viewed online as well.
However, Viacom is poised to gain from the success of its summer box-office releases and significant business generated by its "Transformer 4" movie franchisee.
Our proven model does not conclusively show that Viacom is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or at least 3 for this to happen. That is not the case here, as you will see below
Zacks ESP: Viacom has a negative Zacks ESP. This is because the Most Accurate estimate stands at a loss of $1.66 while the Zacks Consensus Estimate is pegged at $1.68. This leads to an ESP of -1.19% for Viacom.
Zacks Rank: Viacom carries a Zacks Rank #4 (Sell).
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.
DragonWave Inc. ( DRWI ) with an earnings ESP of +16.67% and a Zacks Rank #3 (Hold).
Manchester United plc ( MANU ) has an earnings ESP of +33.33% and carries a Zacks Rank #2 (Buy).
The Walt Disney Company ( DIS ) with an earnings ESP of +0.93% and a Zacks Rank #2.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.