News Corporation (NWSA), a diversified media and information services conglomerate, is slated to report first-quarter fiscal 2015 results on Nov 5. In the last quarter, it had posted a negative surprise of 75%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Advertising, which forms a major part of News Corporation’s total revenue, is highly vulnerable to the economic conditions. Another hindrance to growth might come from the company's inability to renew sports programming rights under favorable terms. However, the company’s diverse revenue streams hedge it against economic cycles.
News Corporation derives revenues from subscriptions, copy circulation, licensing and affiliate fees, direct sales and advertising, and sponsorships. It is also concentrating on pursuing integrated strategies to take advantage of the transition to digital content from print.
Earnings Whispers?
Our proven model does not conclusively show that News Corporation 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. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for News Corporation is -66.67%. This is because the Most Accurate estimate stands at 1 cent, while the Zacks Consensus Estimate is pegged at 3 cents.
Zacks Rank: News Corporation’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 Ranks #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:
L Brands, Inc. (LB) has an Earnings ESP of +6.25% and a Zacks Rank #2 (Buy).
The Walt Disney Co. (DIS) has an Earnings ESP of +3.41% and a Zacks Rank #2.
Dean Foods Co. (DF) has an Earnings ESP of +15.39% and a Zacks Rank #3.
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