News Corporation NWSA, a diversified media and information services conglomerate, is slated to report third-quarter fiscal 2015 results on May 5. In the last quarter, the company had posted a positive earnings surprise of 8.3%. 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. Hence, it may have an adverse impact on the company’s results in the quarter to be reported. Total advertising revenue dropped 3.9% during the second quarter of fiscal 2015. Another hindrance to growth might come from the company's inability to renew sports programming rights under favorable terms. However, News Corporation is in a transitional phase, looking to diversify its revenue streams along with expanding its digital properties.
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: News Corporation has an Earnings ESP of -14.29%. This is because the Most Accurate estimate stands at 6 cents, while the Zacks Consensus Estimate is pegged at 7 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 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:
Skullcandy, Inc. SKUL has an Earnings ESP of +7.69% and a Zacks Rank #1 (Strong Buy).
Bloomin' Brands, Inc. BLMN has an Earnings ESP of +1.85% and a Zacks Rank #3.
Tyson Foods, Inc. TSN has an Earnings ESP of +1.37% and a Zacks Rank #3.
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