World Wrestling Entertainment Inc. (WWE) is slated to report its third-quarter 2014 results on Oct 30, before the opening bell. In the last quarter, the company had delivered a negative earnings surprise of 5.88%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
World Wrestling Entertainment maintains its solid key business metrics and expects its WWE Network to continue to be a vital source for transforming the company’s business model. The previous quarter too was marked by strength witnessed at WWE Network, as it attracted a significant number of subscribers. Although the company plans to undertake several initiatives to keep up the momentum at WWE Network, per sources it seems tough for the company to meet its year-end goal. Also, per sources, earnings are highly dependent on the number of subscribers for WWE Network, which seems to be in troubled waters due to the sluggishness at Netflix, Inc. (NFLX) subscriber growth, failure of Redbox Instant and addition of various streaming products. Assimilating all factors, we prefer being on the sidelines this quarter.
Earnings Whispers?
Our proven model does not conclusively show that World Wrestling Entertainment 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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 17 cents.
Zacks Rank: World Wrestling Entertainment carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 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 to post an earnings beat this quarter:
Best Buy Co., Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #1 (Strong Buy).
L Brands, Inc. (LB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
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