Meredith Corporation MDP, one of the leading media and marketing companies with interests in publishing, broadcasting, integrated marketing and interactive media, is slated to report its third-quarter fiscal 2015 results on Apr 23. In the last quarter, it posted a positive surprise of 2%. Let’s see how things are shaping up prior to this announcement.
Factors This Quarter
The print media continues to be on a decline. Shift of more readers to online may exert pressure on Meredith’s magazine portfolio. Though the company is focusing on the expansion of its digital presence, the metamorphosis will take time. Also, dilutive impact from acquisitions, volatile raw material prices and stiff competition may hinder the magazine publisher’s growth prospects.
Some of the company’s notable acquisitions for digital expansion in the recent past include Shape magazine and related digital assets along with rights of Martha Stewart Living and Martha Stewart Weddings magazines as well as the marthastewart.com and marthastewartweddings.com websites. Though the acquisition of Shape magazine will prove accretive to fiscal 2015 earnings, it will dilute third-quarter earnings by 4 cents per share.
Earnings Whispers
Our proven model does not conclusively project Meredith as likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: ESP for Meredith is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 68 cents.
Zacks Rank: Meredith carries a Zacks Rank #3. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that these to have the right combination of elements to post an earnings beat:
Tyson Foods, Inc. TSN has an Earnings ESP of +1.35% and a Zacks Rank #2.
BJ's Restaurants, Inc. BJRI has an Earnings ESP of +7.14% and a Zacks Rank #2.
The New York Times Company NYT has an Earnings ESP of +12.50% and a Zacks Rank #3.
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