Media giant Twenty-First Century Fox, Inc. FOXA is expected to report first-quarter fiscal 2016 results on Nov 4, 2015. Last quarter, it posted a positive surprise of 5.4%. Notably, the company has surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average earnings surprise of 12%. Let's see how things are developing for this announcement.
Factors at Play
Revenue from Cable Network Programming is expected to grow in the fiscal first quarter due to rising affiliate fees, a dominant source of revenue for the Cable Network segment and a major contributor to total revenue. In fiscal 2015, revenues for Cable network grew 12% with 17% and 3% growth in affiliate fees at Domestic and International segments, respectively. Overall, affiliate fees contributed 35.7% to fiscal 2015 revenues.
On the flip side, increase in expenses due to investments in original programming and increases in sports contracts may hamper advertising revenue at the Television segment. Management expects advertising revenues at the Television segment to remain flat year over year for fiscal 2016 while expenses will increase in the mid-single digit range.
Earnings Whispers
Our proven model does not conclusively project that Twenty-First Century Fox is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and Zacks Rank #1 #2 or #3 for this to happen. This is not the case here as you will see below.
Zacks ESP: Earnings ESP for Twenty-First Century Fox is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at 37 cents.
Zacks Rank: Twenty-First Century Fox carries a Zacks Rank #3 (Hold). We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks to Consider
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:
Nexstar Broadcasting Group, Inc. NXST has an Earnings ESP of +14.29% and a Zacks Rank #2 (Buy).
Time Warner Inc. TWX has an Earnings ESP of +0.92% and a Zacks Rank #3.
Viacom, Inc. VIAB has an Earnings ESP of +0.66% and a Zacks Rank #3.
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