What's in Store for News Corporation (NWSA) in Q1 Earnings?

News Corporation NWSA is slated to report first-quarter fiscal 2019 results on Nov 7. The company outperformed the Zacks Consensus Estimate in all the trailing four quarters by an average of 82.4%. In the last reported quarter, this diversified media conglomerate delivered a positive earnings surprise of 33.3%. 

 

Which Way are Top & Bottom-Line Estimates Headed?

 

The Zacks Consensus Estimate for earnings for the quarter under review stands at 6 cents, reflecting a year-over-year decline of 14.3%. We also note that the Zacks Consensus Estimate has gone down by a penny in the past 60 days. However, News Corporation has a remarkable history, at least in terms of the bottom line. The company’s fourth-quarter fiscal 2018 results marked the seventh consecutive quarter of earnings beat.

 

The Zacks Consensus Estimate for revenues is $2,554 million, up approximately 24.1% from $2,058 million in the year-ago quarter. If all goes well, this may be the fifth straight quarter of top-line beat for the company. We note that total revenues of this New York-based company increased 29.5% in the last reported quarter.

 

Let’s see how things are shaping up prior to this announcement.

 

News Corporation Price and EPS Surprise

News Corporation Price and EPS Surprise | News Corporation Quote

Factors to Consider

 

News Corporation is battling soft print advertising demand with readers’ preferring to access news online, mostly free. Advertising forms a major part of News Corporation’s total revenues (approximately 28% of fiscal 2018 total revenues). Advertising revenues at News and Information Services segment fell 2% during the final quarter of fiscal 2018 on account of sluggishness in the print advertising market. The decision to stop The Wall Street Journal’s international print editions also impacted fourth-quarter fiscal 2018 results.

 

Nevertheless, the company is concentrating on cost cutting and expanding digital offerings with greater emphasis on real estate services to mitigate the impact of sluggish print advertising demand. Also, the company’s licensing deal with Amazon to create an original television series based on The Lord of the Rings by JRR Tolkien has been contributing to the company’s results. These measures are likely to generate higher revenues and boost the company’s profitability. 

 

The company is impressed with its Book Publishing segment’s performance and continues to expand its foreign language penetration. At digital real estate services, it is likely to witness sturdy revenue growth at the REA and Move. This division is expected to drive the company’s overall performance.

 

Notably, the company’s top line in the last reported quarter gained from consistent momentum in the Book Publishing and Digital Real Estate Services segments. Considering these growth-driving factors, the Zacks Consensus Estimate for revenues of Book Publishing, Digital Real Estate Services, and News and Information Services in first quarter of fiscal 2019 is pegged at $405 million, $294 million and $1,228 million, up 1%, 8.5% and 1% year over year, respectively. Meanwhile, the consensus mark for Cable Network Programing segment is anticipated to soar more than four folds to $666 million.

 

What Does the Zacks Model Say?

 

Our proven model does not conclusively show that News Corporation is likely to beat estimates this quarter. 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.

 

News Corporation has a Zacks Rank #4 (Sell) but an Earnings ESP of 0.00%. We caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into earnings announcement, especially when the company is seeing negative estimate revisions.

 

Stocks With Favorable Combination

 

Here are some better-ranked companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

 

SeaWorld Entertainment, Inc. SEAS has an Earnings ESP of +7.88% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Monro Muffler Brake, Inc. MNRO has an Earnings ESP of +0.86% and a Zacks Rank #2. 

 

Charter Communications, Inc. CHTR has an Earnings ESP of +1.38% and a Zacks Rank #3. 

 

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