Outfront Media Inc. OUT, formerly CBS Outdoor Americas Inc., is slated to report third-quarter 2015 results after the closing bell on Nov 5. The company woefully missed the Zacks Consensus Estimate last quarter and had reported an average miss of 36.87% over the trailing four quarters.
Key Factors in the Past Quarter
During the soon-to-be-reported quarter, Outfront and JCDecaux SA entered into an agreement to sell the Latin America business of OUTFRONT Media to JCDecaux Latin America / Corameq for $82 million. Such portfolio restructuring efforts are likely to be drag on earnings. The company is repositioning its portfolio and making efforts to invest in more lucrative opportunities.
Outfront aims to increase the number of digital billboard displays in heavily trafficked locations as an important part of its organic growth strategy. Digital billboard displays have the potential to attract additional business from new and existing customers. In addition, digital billboard displays enable to run multiple advertisements on each display (up to eight per minute) .Also, Outfront Media is set to gain from its efforts to build and strengthen its leadership position in the out-of-home media market.
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 (Strong Buy), #2 (Buy) and #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: The Most Accurate estimate stands at 16 cents while the Zacks Consensus Estimate is higher at 17 cents. This equates to an ESP of -5.88%, implying a probable earnings miss.
Zacks Rank: Outfront’s Zacks Rank #3, when combined with a negative ESP, makes surprise prediction difficult. Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and #5) should never be considered going into an 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:
Windstream Holdings, Inc. WIN has an Earnings ESP of +7.50% and carries a Zacks Rank #2.
Markel Corp. MKL has an Earnings ESP of +44.44% and carries a Zacks Rank #2.
McDermott International Inc MDR has an Earnings ESP of +20.00% and carries a Zacks Rank #2.
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