About a month has gone by since the last earnings report for World Wrestling Entertainment, Inc. . Shares have added about 14.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
World Wrestling Entertainment Beats Q3 Earnings & Sales
World Wrestling Entertainment reported robust quarterly results for the second straight quarter, when it came out with third-quarter 2017 financial numbers. Back-to-back solid performance gives an indication that the company’s effort to focus on increasing original content production, localization and strategic initiatives bode well.
Let’s Delve Deep
WWE reported adjusted earnings of 28 cents a share that beat the Zacks Consensus Estimate of 20 cents and improved sharply from the year-ago figure of 14 cents.
Moreover, WWE’s revenues of $186.4 million surpassed the Zacks Consensus Estimate of $173 million and jumped 13.5% year over year, primarily on the back of 19% increase in revenues in North America and monetization of WWE’s video content. Further, revenues from outside North America were mostly flat year over year as growth of WWE Network subscribers and rise in television right fees were overshadowed by decline in live event revenues.
The number of average paid subscribers increased 4% year over year in the quarter to 1.52 million. The company stated that it launched WWE Network in China with its PPTV partners. Further, WWE Network is already available in the Indian Subcontinent, Germany, Malaysia, Austria, Mexico, Switzerland and Japan.
Revenues from North America jumped 19% to $140.7 million, while revenues from Europe/Middle East/Africa (EMEA) came in at $24.6 million, flat year over year. The Asia Pacific (APAC) and Latin America generated revenues of $18.8 million and $2.3 million, which represent a gain of 1.6% and decline of 8%, respectively.
Management is strengthening and expanding WWE Network through the creation of new content along with implementation of programs which will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will aid the drive.
Segmental details:
Media Division: Revenues from the company’s Media division increased 13% to $125.2 million, mainly owing to increase in contractual television right fees, growth registered in WWE Network Subscribers and also due to licensed reality series. Network revenues were up 12% to $50.3 million and Digital Media revenues climbed 22% to $7.9 million. Moreover, Television and Home Entertainment revenues came in at $64.7 million and $2.3 million, up 15% and down 8%, respectively.
Live Events: Revenues from Live Events advanced 10% to $31.6 million driven by 14 additional events, which were held during the reported quarter. A total of 96 events took place in the third quarter, which includes 89 events in North America and seven internationally. In the prior-year quarter, there were 82 events in total, including 71 in North America and 11 globally. North-American live event revenues came in at $26.4 million, up 22% year over year. While International live event revenues were down 26% year over year to $12.8 million.
Consumer Product Division: This segment’s revenues came in at $24 million, up 11% year over year. Revenues from WWE Shop and Licensing jumped 15% and 46% to $1.5 million and $6.7 million, respectively.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $109.2 million, long-term debt of $32.1 million and shareholders’ equity of $251.6 million. In the third quarter, the company had generated free cash flow of $22 million compared with $14 million in the year-ago quarter.
Guidance
For 2017, the company is targeting adjusted OIBDA in the band of $108-$112 million, up from the prior estimate of $100 million. For the year, the company is expecting average paid subscriber to be 1.53 million, up 8% year over year.
For fourth-quarter 2017, WWE anticipates average paid subscribers of 1.47 million (+/- 2%). Adjusted OBIDA is projected in the range of $31-$35 million compared with the year-ago OBIDA of $20.5 million.
For 2018, management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. The company anticipates adjusted OIBDA of at least $115 million.
Long-term Growth Driver
We believe WWE will continue to report record revenue growth as it has not only extended its earlier deal with different companies but also signed agreement with new service provider for airing its flagship program Raw and SmackDown in different countries.
The company stated that distribution agreement, which generated a large chunk of television rights revenue, will expire in 2019 in some regions. Licensing of Raw and SmackDown in the United States will terminate in Sep 30, 2019, while in the UK and India it will expire on Dec 31, 2019. The company is looking to renew the distribution agreement in these regions somewhere between May 2018 and first-half 2019.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
World Wrestling Entertainment, Inc. Price and Consensus
VGM Scores
At this time, the stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with a D. Charting the exact same path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is solely suitable for growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
Image: Bigstock
Why Is World Wrestling Entertainment (WWE) Up 14.8% Since Earnings Report?
About a month has gone by since the last earnings report for World Wrestling Entertainment, Inc. . Shares have added about 14.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
World Wrestling Entertainment Beats Q3 Earnings & Sales
World Wrestling Entertainment reported robust quarterly results for the second straight quarter, when it came out with third-quarter 2017 financial numbers. Back-to-back solid performance gives an indication that the company’s effort to focus on increasing original content production, localization and strategic initiatives bode well.
Let’s Delve Deep
WWE reported adjusted earnings of 28 cents a share that beat the Zacks Consensus Estimate of 20 cents and improved sharply from the year-ago figure of 14 cents.
Moreover, WWE’s revenues of $186.4 million surpassed the Zacks Consensus Estimate of $173 million and jumped 13.5% year over year, primarily on the back of 19% increase in revenues in North America and monetization of WWE’s video content. Further, revenues from outside North America were mostly flat year over year as growth of WWE Network subscribers and rise in television right fees were overshadowed by decline in live event revenues.
The number of average paid subscribers increased 4% year over year in the quarter to 1.52 million. The company stated that it launched WWE Network in China with its PPTV partners. Further, WWE Network is already available in the Indian Subcontinent, Germany, Malaysia, Austria, Mexico, Switzerland and Japan.
Revenues from North America jumped 19% to $140.7 million, while revenues from Europe/Middle East/Africa (EMEA) came in at $24.6 million, flat year over year. The Asia Pacific (APAC) and Latin America generated revenues of $18.8 million and $2.3 million, which represent a gain of 1.6% and decline of 8%, respectively.
Management is strengthening and expanding WWE Network through the creation of new content along with implementation of programs which will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will aid the drive.
Segmental details:
Media Division: Revenues from the company’s Media division increased 13% to $125.2 million, mainly owing to increase in contractual television right fees, growth registered in WWE Network Subscribers and also due to licensed reality series. Network revenues were up 12% to $50.3 million and Digital Media revenues climbed 22% to $7.9 million. Moreover, Television and Home Entertainment revenues came in at $64.7 million and $2.3 million, up 15% and down 8%, respectively.
Live Events: Revenues from Live Events advanced 10% to $31.6 million driven by 14 additional events, which were held during the reported quarter. A total of 96 events took place in the third quarter, which includes 89 events in North America and seven internationally. In the prior-year quarter, there were 82 events in total, including 71 in North America and 11 globally. North-American live event revenues came in at $26.4 million, up 22% year over year. While International live event revenues were down 26% year over year to $12.8 million.
Consumer Product Division: This segment’s revenues came in at $24 million, up 11% year over year. Revenues from WWE Shop and Licensing jumped 15% and 46% to $1.5 million and $6.7 million, respectively.
Other Financial Details
WWE ended the quarter with cash and cash equivalents of $109.2 million, long-term debt of $32.1 million and shareholders’ equity of $251.6 million. In the third quarter, the company had generated free cash flow of $22 million compared with $14 million in the year-ago quarter.
Guidance
For 2017, the company is targeting adjusted OIBDA in the band of $108-$112 million, up from the prior estimate of $100 million. For the year, the company is expecting average paid subscriber to be 1.53 million, up 8% year over year.
For fourth-quarter 2017, WWE anticipates average paid subscribers of 1.47 million (+/- 2%). Adjusted OBIDA is projected in the range of $31-$35 million compared with the year-ago OBIDA of $20.5 million.
For 2018, management is optimistic about achieving another great year of revenues and adjusted OIBDA growth. The company anticipates adjusted OIBDA of at least $115 million.
Long-term Growth Driver
We believe WWE will continue to report record revenue growth as it has not only extended its earlier deal with different companies but also signed agreement with new service provider for airing its flagship program Raw and SmackDown in different countries.
The company stated that distribution agreement, which generated a large chunk of television rights revenue, will expire in 2019 in some regions. Licensing of Raw and SmackDown in the United States will terminate in Sep 30, 2019, while in the UK and India it will expire on Dec 31, 2019. The company is looking to renew the distribution agreement in these regions somewhere between May 2018 and first-half 2019.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
World Wrestling Entertainment, Inc. Price and Consensus
World Wrestling Entertainment, Inc. Price and Consensus | World Wrestling Entertainment, Inc. Quote
VGM Scores
At this time, the stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with a D. Charting the exact same path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is solely suitable for growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.