Outfront Media (OUT) to Report Earnings: What to Expect?

Outfront Media Inc. OUT, formerly CBS Outdoor Americas Inc., is slated to report sec-quarter 2014 results on Aug 6, after the closing bell.

Headquartered in New York, this company, which leases advertising space on out-of-home advertising structures and sites across the U.S., Canada and Latin America, began operating as a real estate investment trust (“REIT”) a year back.

Last quarter, the company had missed the Zacks Consensus Estimate by 50%, and has posted an average miss of 15.3% over the four trailing quarters. Let’s see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Despite the market softness in national advertising, Outfront Media is set to gain from its efforts to build and strengthen its leadership position in the out-of-home media market. In fact, recent data shows that consumer confidence has been improving amid low prices of gas and growth in employment. Thus, retail activity and consumer spending, and consequently media spending are expected to get a boost.

The company’s Van Wagner acquisition is considered a notable improvement toward its platform for national advertisers.

During the soon-to-be reported quarter, the out-of-home advertising firm launched its in-house boutique — Outfront Studios, which will design advertising campaigns for clients internally. The first-of-its-kind within the out-of-home space, Outfront Studios will develop display advertising in consultation with clients using Outfront's proprietary research. The initiative is expected to boost the company’s top line in the coming quarters.

However, foreign currency volatility could prove to be a headwind for the company and might adversely affect its results.

Earnings Whispers

Our proven model does not conclusively show that Outfront Media 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: The Earnings ESP for the company currently stands at -10.00% as the Most Accurate estimate is pegged at 18 cents while the Zacks Consensus Estimate is higher at 20 cents.

Zacks Rank: Outfront Media’s Zacks Rank #4 (Sell) further decreases the predictive power of ESP, making us less confident of an earnings surprise call.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks That Warrant a Look

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Agios Pharmaceuticals, Inc. AGIO has an Earnings ESP of +75.00% and carries a Zacks Rank #1 (Strong Buy). It is scheduled to report results on Aug 6.

Ashford Hospitality Trust, Inc. AHT has an Earnings ESP of +4.35% and holds a Zacks Rank #1. It is scheduled to report results on Aug 6.

Red Robin Gourmet Burgers Inc. RRGB has an Earnings ESP of +2.63% and carries a Zacks Rank #2 (Buy). It is scheduled to report results on Aug 11.

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