Time Inc. TIME, one of the leading media companies, is slated to report first-quarter 2015 results on May 7. In the last quarter, the company had delivered a negative earnings surprise of 6.4%. Let’s see how things are shaping up for this announcement.
Factors Influencing this Quarter
Time, with its impressive portfolio of magazines such as People, Sports Illustrated, InStyle, Time, Weekly, Real Simple, Southern Living, Entertainment Weekly, is a force to reckon within the print media circle. Formed after a spin-off from Time Warner, the company is effectively working toward a massive transformation and to achieve a better operating model.
However, the company’s results continue to be marred by secular headwinds. With the shift to digitalization, the print media is on a decline. Moreover, print advertising, which forms a chunk of the company’s revenues, has been displaying a deteriorating trend. This is likely to impact the results of the company in the quarter to be reported. Print and other advertising revenues declined 10% in the fourth quarter of 2014. Management now expects total revenue for 2015 to decline in the range of 3%–6% against a decrease of 2.2% in 2014. Though the company has been focusing 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 +45.00%. This is because the Most Accurate estimate stands at a loss of 11 cents per share, while the Zacks Consensus Estimate is pegged at a loss of 20 cents.
Zacks Rank: Time carries a Zacks Rank #4 (Sell). 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 this quarter:
Jack in the Box Inc. JACK has an Earnings ESP of +1.52% and a Zacks Rank #3 (Hold).
Kate Spade & Company KATE has an Earnings ESP of +150.0% and a Zacks Rank #3.
Treehouse Foods, Inc. THS has an Earnings ESP of +1.72% and a Zacks Rank #3.
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