Time Warner Inc. (TWX) is scheduled to release fourth-quarter 2014 results on Feb 11. In the previous quarter, this diversified media conglomerate had posted a positive earnings surprise of 29.8%. Let’s see how things are shaping up for this announcement.
Factors Affecting this Quarter
Time Warner’s foray into new markets, divestments and digital endeavors remain its primary strengths. Moreover, investments in content and technology in recent years bode well. However, a soft advertising environment and the risk of failure on part of the company to renew affiliate contracts, remain concerns. Moreover, analysts also highlighted that foreign currency headwinds, higher tax and restructuring charges may weigh upon the quarter’s performance.
Earnings Whispers
Our proven model does not conclusively show that Time Warner 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 Warner currently has an Earnings ESP of -2.11%. This is because the Most Accurate estimate stands at 93 cents, while the Zacks Consensus Estimate is pegged at 95 cents.
Zacks Rank: Time Warner’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 to post an earnings beat this quarter:
Select Comfort Corporation (SCSS) has an Earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).
Comcast Corporation (CMCSA) has an Earnings ESP of +1.30% and a Zacks Rank #3.
American Tower Corporation (AMT) has an Earnings ESP of +4.00% and a Zacks Rank #3.
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