We expect Discovery Communications Inc. DISCA to beat expectations when it reports third-quarter 2015 financial results on Nov 3, before market opens.
In the last quarter, the company posted a negative 4.26% earnings surprise. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Discovery Communications is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP stand at +2.56% because the Most Accurate estimate is 40 cents while the Zacks Consensus Estimate is 39 cents. This serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Discovery Communications currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
The combination of Discovery Communications’ Zacks Rank #3 and +2.56% ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-Than-Expected Earnings?
In order to gain viewers, Discovery continues to invest in new content to counter competition as well as to cater to changing taste and preferences. Such large-scale investments will certainly boost the company’s viewership ratings apart from its ad revenues. Moreover, the company is poised to benefit from the improvement in the U.S. economy as it will generate growth in ad revenues while moving ahead.
In addition, Discovery Communications’ expansion outside the U.S. opens up considerable scope for the company.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Scripps Networks Interactive, Inc. SNI with an Earnings ESP of +1.03% and a Zacks Rank #2 (Buy).
Townsquare Media, Inc. TSQ with an Earnings ESP of +2.5% and a Zacks Rank #2.
Viacom, Inc. VIAB with an Earnings ESP of +0.66% and a Zacks Rank #3.
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