We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Lower WarnerMedia Margins Hurt AT&T's (T) Q1 Earnings?
Read MoreHide Full Article
AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2020 results on Apr 22, before the opening bell. In the first quarter, the company is likely to have recorded lower total revenues year over year due to adverse impacts from the coronavirus pandemic, foreign currency and additional investments for new content production in HBO Max.
Factors at Play
The WarnerMedia segment represents the various business units of the erstwhile Time Warner namely, Turner, Home Box Office and Warner Bros. It also includes AT&T’s Regional Sports Networks in the Turner division and Otter Media. With premium content from HBO, Turner and Warner Bros., along with enriching advertising services and data analysis, the WarnerMedia segment has been offering steady revenues since its acquisition.
This trend is likely to have continued in the first quarter. The company is continually improving the relevancy of advertising by pooling a unique set of assets — valuable consumer data and insights, advanced advertising capabilities and engaged passionate fan bases — which is likely to have translated in higher ad revenues in the quarter. WarnerMedia is also expected to have monetized branded content on Turner network by extending ad campaign across Xandr’s addressable TV advertising footprint, spanning 15 million households. However, investments in HBO Max in the first quarter for its upcoming launch, in the form of new content production, foregone licensing revenues and platform costs, are likely to have led to soft margins.
During the quarter under review, AT&T decided to transform its Audience Network Pay TV channel to the HBO Max Preview channel to support the upcoming launch of the HBO Max streaming service. HBO Max is scheduled for launch in May 2020 with about 10,000 hours of premium content, leveraging an extensive collection of exclusive original programs and the most sought-after shows from WarnerMedia’s vast portfolio of beloved brands as well as libraries.
For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $8,267 million that indicates a decline from $8,379 million reported in the year-ago quarter. Operating income from WarnerMedia is pegged at $1,945 million, which indicates a fall from $2,310 million reported in the prior-year quarter. The consensus estimate for EBITDA from the segment is at $2,084 million, which calls for a decline from $2,386 million recorded in the year-earlier quarter.
The Zacks Consensus Estimate for aggregate revenues is pegged at $44,271 million, which indicates a drop of 1.2% from $44,827 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 85 cents per share that suggests a decline from 86 cents reported in the year-earlier quarter. (Read More: Will Adverse Coronavirus Impacts Dent AT&T Q1 Earnings?)
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This, however, is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -3.83% with the former being pegged at 81 cents and the latter at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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:
Eli Lilly and Company (LLY - Free Report) is scheduled to release results on Apr 23. The company has an Earnings ESP of +1.67% and carries a Zacks Rank #2.
Citrix Systems, Inc. has an Earnings ESP of +1.58% and carries a Zacks Rank of 2. The company is set to report results on Apr 23.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Image: Bigstock
Will Lower WarnerMedia Margins Hurt AT&T's (T) Q1 Earnings?
AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2020 results on Apr 22, before the opening bell. In the first quarter, the company is likely to have recorded lower total revenues year over year due to adverse impacts from the coronavirus pandemic, foreign currency and additional investments for new content production in HBO Max.
Factors at Play
The WarnerMedia segment represents the various business units of the erstwhile Time Warner namely, Turner, Home Box Office and Warner Bros. It also includes AT&T’s Regional Sports Networks in the Turner division and Otter Media. With premium content from HBO, Turner and Warner Bros., along with enriching advertising services and data analysis, the WarnerMedia segment has been offering steady revenues since its acquisition.
This trend is likely to have continued in the first quarter. The company is continually improving the relevancy of advertising by pooling a unique set of assets — valuable consumer data and insights, advanced advertising capabilities and engaged passionate fan bases — which is likely to have translated in higher ad revenues in the quarter. WarnerMedia is also expected to have monetized branded content on Turner network by extending ad campaign across Xandr’s addressable TV advertising footprint, spanning 15 million households. However, investments in HBO Max in the first quarter for its upcoming launch, in the form of new content production, foregone licensing revenues and platform costs, are likely to have led to soft margins.
During the quarter under review, AT&T decided to transform its Audience Network Pay TV channel to the HBO Max Preview channel to support the upcoming launch of the HBO Max streaming service. HBO Max is scheduled for launch in May 2020 with about 10,000 hours of premium content, leveraging an extensive collection of exclusive original programs and the most sought-after shows from WarnerMedia’s vast portfolio of beloved brands as well as libraries.
For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $8,267 million that indicates a decline from $8,379 million reported in the year-ago quarter. Operating income from WarnerMedia is pegged at $1,945 million, which indicates a fall from $2,310 million reported in the prior-year quarter. The consensus estimate for EBITDA from the segment is at $2,084 million, which calls for a decline from $2,386 million recorded in the year-earlier quarter.
The Zacks Consensus Estimate for aggregate revenues is pegged at $44,271 million, which indicates a drop of 1.2% from $44,827 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 85 cents per share that suggests a decline from 86 cents reported in the year-earlier quarter. (Read More: Will Adverse Coronavirus Impacts Dent AT&T Q1 Earnings?)
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This, however, is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -3.83% with the former being pegged at 81 cents and the latter at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AT&T Inc. Price and EPS Surprise
AT&T Inc. price-eps-surprise | AT&T Inc. Quote
Zacks Rank: AT&T currently has a Zacks Rank #3.
Stocks to Consider
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:
Ardagh Group S.A. is slated to release quarterly results on Apr 23. It has an Earnings ESP of +8.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eli Lilly and Company (LLY - Free Report) is scheduled to release results on Apr 23. The company has an Earnings ESP of +1.67% and carries a Zacks Rank #2.
Citrix Systems, Inc. has an Earnings ESP of +1.58% and carries a Zacks Rank of 2. The company is set to report results on Apr 23.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>