Time Inc. TIME, one of the leading media companies, is slated to report second-quarter 2015 results on Aug 4, before the opening bell. In the last quarter, the company had delivered a positive earnings surprise of 70%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Time Inc., 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 in June last year, the company is effectively working toward a massive transformation and to achieve a better-operating model. The company has been expanding and diversifying its brands, content and audiences through acquisitions.
However, the company’s results continue to be marred by currency and other secular headwinds. With the shift to digitalization, the print media is on a decline and hence, print advertising, which forms a chunk of the company’s revenues, has been displaying a deteriorating trend. This is likely to impact the results in the quarter to be reported.
Print and other advertising revenues declined 12% year over year in the first quarter of 2015. Management 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 pursuing acquisitions and deals to boost its portfolio and stressing on improving its digital portal, results from such endeavors are a time consuming affair.
Earnings Whispers
Our proven model does not conclusively show that Time Inc. 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 Inc. currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 13 cents per share.
Zacks Rank: Time Inc. carries a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company’s ESP of 0.00% 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 other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Jack in the Box Inc. JACK has an Earnings ESP of +2.74% and a Zacks Rank #1 (Strong Buy).
The Walt Disney Co. DIS has an Earnings ESP of +2.16% and a Zacks Rank #3.
Coach, Inc. COH has an Earnings ESP of +3.45% and a Zacks Rank #3.
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