Time Inc. (TIME), one of the leading media companies, is slated to report its fourth-quarter 2014 results on Feb 12. In the last quarter, the company delivered a positive earnings surprise of 13.9%. Let’s see how things are shaping up for this announcement.
Factors Affecting This Quarter
Time, with its impressive portfolio of magazines such as People, Sports Illustrated, InStyle, Time, Weekly, Real Simple, Southern Living, Entertainment and Fortune, is a force to reckon with in the print media circle. Formed after a spin off from Time Warner in June last year, the company is effectively working towards a massive transformation and to achieve a better-operating model.
However, the company continues to be marred by secular headwinds. With the shift to digitalization, the print media is on a decline. Moreover, print advertising that forms a chunk of the company’s revenues has been displaying a deteriorating trend. As a result, the company lowered its outlook for the full year while reporting third-quarter results.
Though the company has been stressing on improving its digital portal, it is likely to be a time consuming affair.
Earnings Whispers?
Our proven model does not conclusively show that Time 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: Time currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 78 cents per share.
Zacks Rank: Time carries a Zacks Rank #2 (Buy). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, 0.00% ESP 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:
Select Comfort Corporation (SCSS) has an Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).
Whole Foods Market, Inc. (WFM) has an Earnings ESP of +2.22% and a Zacks Rank #2.
McGraw Hill Financial, Inc. (MHFI) has an Earnings ESP of +2.22% and a Zacks Rank #3 (Hold).
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