Is Time Warner Inc. (TWX) part of your portfolio? If not, then this is the right time to add the stock, as it looks very promising. The underlying factors are capable of carrying the momentum further. The stock sports a Zacks Rank #2 (Buy) and surged roughly 32% in 2014, demonstrating its inherent strength. We believe that it could prove to be a solid bet for investors.
The company’s primary strength is its earnings surprise history. In the trailing 10 quarters, Time Warner has beaten the Zacks Consensus Estimate by an average of 9.8%, including 29.8% for the last reported quarter.
Moreover, Time Warner, which competes with Twenty-First Century Fox, Inc. (FOXA), posted impressive third-quarter 2014 results, wherein earnings of $1.22 per share surpassed the Zacks Consensus Estimate of 94 cents, reflecting strength across Turner, Home Box Office and Warner Bros.
Further, the company’s total revenue of $6,243 million jumped 3% year over year and came ahead of the Zacks Consensus Estimate of $6,129 million.
Driven by healthy results, management expects high-teens growth in adjusted earnings per share for 2014 against low-teens increase forecast earlier, that seems quite achievable. The company’s long-term earnings per share growth rate stands at a healthy 12.9%.
The better-than-expected results triggered an uptrend in the Zacks Consensus Estimate, as analysts become optimistic about Time Warner’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that increased 4% to $4.17 per share for 2014 and 3.5% to $4.73 per share for 2015 in the past 90 days.
We believe that the company’s initiatives such as foray into new markets, divestment activities and digital endeavors would help it to continue with its upbeat performance in the coming quarters. Time Warner’s investments in content and technology in the recent years also bode well for the company.
Other Stocks That Warrant a Look
Other favorably ranked stocks include Nexstar Broadcasting Group, Inc. (NXST), sporting a Zacks Rank #1 (Strong Buy) and Salem Communications Corp. (SALM), carrying a Zacks Rank #2.
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