News Corporation NWSA, the diversified media conglomerate, is slated to report first-quarter fiscal 2016 results on Nov 5. The big question facing investors now is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, News Corporation outperformed the Zacks Consensus Estimate by an average of 49.1%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Unlikely Earnings Beat
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. News Corporation has an Earnings ESP of -14.29% as the Most Accurate estimate stands at 6 cents, while the Zacks Consensus Estimate is pegged at 7 cents. News Corporation carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Factors Influencing this Quarter
Foreign currency headwinds and soft advertising demand may weigh upon the company’s performance in the quarter to be reported. Advertising, which forms a major part of News Corporation’s total revenue (approximately 44% of fiscal 2015 total revenue), remains highly vulnerable to the economic conditions. Total advertising revenue dropped 5% during the fourth quarter of fiscal 2015. Advertising revenue fell across its News and Information Services segment due to the adverse impact of foreign currency fluctuations, softness in the print advertising market, and a decline in revenues at News America Marketing.
News Corporation is in a transitionary phase, looking to diversify its revenue streams. Moreover, a sturdy balance sheet provides it with the financial flexibility to focus on strategic acquisitions, operational enhancement and shareholder-friendly moves.
Stocks Poised to Beat Earnings Estimates
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:
Facebook, Inc. FB has an Earnings ESP of +5.71% and a Zacks Rank #1 (Strong Buy).
Scripps Networks Interactive, Inc. SNI has an Earnings ESP of +1.03% and a Zacks Rank #2.
Viacom, Inc. VIAB has an Earnings ESP of +0.66% and a Zacks Rank #3 (Hold).
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