AMC Networks Inc. AMCX, a leading media company in the U.S., is slated to report its third-quarter 2015 financial numbers before the opening bell on Nov 5.
Last quarter, AMC Networks delivered a positive earnings surprise of 26.80%. Moreover, the company’s earnings have surpassed the Zacks Consensus Estimate in all of the past four quarters, with an average beat of 15.67%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that the company is likely to beat the Zacks Consensus Estimate because it has the right combination of two key ingredients.
Zacks ESP: AMC Networkshas an earnings ESP of +2.30%. This is because the Zacks Consensus Estimate is 87 cents while the Most Accurate estimate is pegged higher at 89 cents.
Zacks Rank: AMC Networks has a Zacks Rank #1 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of AMC Networks’ Zacks Rank #3 and +2.30% ESP makes us confident of an earnings beat at the company.
What is Driving the Better-than-Expected Earnings?
Riding on the success of its popular TV series ‘Breaking Bad’ and ‘Mad Men’, AMC Networks has established itself as one of the fastest growing media companies in recent times. ‘Fear the Walking Dead’, its spin-off show from the popular ‘The Walking Dead’ series, recently broke all viewership records, making for a huge commercial success at the company.
AMC Networks’ strength lies in programs with original content for which it has ownership rights. The company’s original series, ‘Humans’, is doing well in terms of ratings and reviews, thus raising hopes for higher advertisement revenues.
However, with the rise of over-the-top (OTT) Internet TV services from Netflix Inc. NFLX and Hulu, competition in bidding for high quality TV programs has become fiercer. The TV business is already facing threats from OTT service providers and the recent trend of the bulk of ad revenues skewed toward Internet TV is a worrying sign for the industry, with AMC Networks being no exception.
Other Stocks to Consider
Here are some other companies that investors may consider as our model shows these too have the right combination of elements to post an earnings beat this quarter.
Nexstar Broadcasting Group Inc. NXST, which has an earning ESP of +14.29% and a Zacks Rank #2
Scripps Networks Interactive, Inc. SNI, which has an earning ESP of +1.03% and a Zacks Rank #2
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