Discovery Communications Inc. DISCA is set to release second-quarter 2015 results before the opening bell on Aug 5.
In the last quarter, the company posted a 16.6% earnings surprise. Let’s see how things are shaping up for this announcement.
Factors at Play
Discovery’s ad revenues are strongly dependent on viewership ratings, which tend to change with time. In order to gain viewers, the company needs to invest in new content to counter competition as well as cater to changing taste and preferences.
Meanwhile, Discovery is facing stiff competition from various media players. Further, massive growth of personal digital video recorders (DVRs), video-on-demand technology, IPTV along with smartphones and tablets may completely change the TV viewing landscape, which may jeopardize the company’s business model.
Earnings Whispers
Our proven model does not conclusively show that Discovery is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or at least #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are both poised at 47 cents. Hence, the ESP is 0.00%.
Zacks Rank: Discovery carries a Zacks Rank #4 (Sell). We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Ashford Hospitality Trust, Inc. AHT has an earnings ESP of +4.35% and a Zacks Rank #1.
Sprint Corporation S has an earnings ESP of +25.0% and a Zacks Rank #3.
The Walt Disney Company DIS has an earnings ESP of +2.16% and a Zacks Rank #3.
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