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How Time Warner (TWX) Looks Just Ahead of Q1 Earnings

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Time Warner Inc. , the media and entertainment company, is slated to report first-quarter 2017 results before the market opens, on May 3. In the trailing four quarters, it has outperformed the Zacks Consensus Estimate by an average of 16.6%. In the preceding quarter, the company witnessed a positive earnings surprise of 5%. Let’s see how things are shaping up prior to this announcement.

How are Estimates Shaping Up?

Investors are keeping their fingers crossed and hoping that Time Warner surpasses earnings estimate even this time. The current Zacks Consensus Estimate for the quarter under review is $1.44 down from $1.49 reported in the year-ago period. We note that the Zacks Consensus Estimate has been stable lately. Analysts polled by Zacks expect revenues of $7,660 million, up about 4.8% from the year-ago quarter.

Time Warner forms part of the Consumer Discretionary sector, which occupies a space in the bottom 44% of the Zacks Classified sectors (9 out of 16). As per the latest Earnings Preview report, total earnings and revenues for the sector are anticipated to increase by 8.1% and 11.3%, respectively. We noted that the Consumer Discretionary sector has outperformed the broader market in the past three months. In the said time frame, this Zacks categorized sector gained 6.3%, while S&P 500 index advanced 4.9%.

Factors Influencing This Quarter

We believe Time Warner’s foray into new markets and digital endeavors augur well for its operational performance. We also think that management’s focus on original programming, cost reduction and increasing investments in key areas will enhance profitability. Additionally, the company has been expanding digital presence to enable consumers to access content from several platforms and devices. Its investments in video content and technology continue to drive results. All these initiatives may be reflected in the quarter to be reported. However, decline in overall advertising spending and currency headwinds may adversely impact performance.

Time Warner Inc. Price, Consensus and EPS Surprise

 

Time Warner Inc. Price, Consensus and EPS Surprise | Time Warner Inc. Quote

What Does the Zacks Model Suggest?

Our proven model does not conclusively show that Time Warner, which has accepted the buyout offer of AT&T Inc. (T), is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Time Warner has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.44. The company’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Stocks Poised to Beat Earnings Estimates

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:

Best Buy Co. Inc. (BBY - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe's Companies, Inc. (LOW - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #2.

L Brands, Inc. (LB - Free Report) has an Earnings ESP of +4.17% and a Zacks Rank #3.

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