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What's in Store for World Wrestling (WWE) in Q2 Earnings?

World Wrestling Entertainment, Inc. WWE is scheduled to report second-quarter 2017 financial numbers, before the opening bell on Jul 27. In the previous quarter, the company missed the Zacks Consensus Estimate by 27.3%.

Notably, the company’s earnings have missed the Zacks Consensus Estimate in three out of trailing four quarters by an average of 34.3%. Here’s a discussion on the determinants of the second-quarter results.

What to Expect?

The question lingering in investors’ minds now is whether World Wrestling Entertainment will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 6 cents, in comparison with year-ago quarter earnings of 1 cent. We note that the Zacks Consensus Estimate has been stable in the past 60 days. Analysts polled by Zacks expect revenues of $204.5 million compared with $199 million reported in the year-ago quarter.

We noted that the stock has outperformed both the Zacks categorized Movie/TV Production/Distribution industry and the S&P 500 Index on a year-to-date basis. The company’s shares have advanced 15.7%, while the Zacks categorized industry and the S&P 500 have witnessed a gain of 1.5% and 10.1%, respectively.

Factors Influencing This Quarter

In three out of the preceding four quarters, WWE has missed the Zacks Consensus Estimate and consequently analysts are skeptical about the company’s performance in second-quarter 2017. WWE operates in the highly competitive market of entertainment video. Further, decline in home entertainment and pay-per view revenues has been a major concern for the investors. In 2016, home entertainment net revenues came in at $13.1 million in comparison with $13.4 million and $27.3 million in 2015 and 2014, respectively. Further, the trend continued in the first quarter, with home entertainment revenues declining 27%.

For second-quarter 2017, WWE anticipates average paid subscribers of 1.63 million. Adjusted OBIDA is projected in the range of $13–$17 million. Further, WWE expects contractual rise in television right fees from important distribution agreements and believes that the company will continue to add more WWE Network subscribers.

In order to boost WWE Network’s revenues, the company has been implementing certain strategies including the development of fresh content, execution of customer acquisition and retention programs, increase in distribution platform, introduction of new features along with foraying into new locations.

Zacks Model Shows Unlikely Beat

Our proven model does not conclusively show that WWE is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. WWE has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 6 cents. The company carries a Zacks Rank #3 which increases the predictive power of ESP but an ESP of 0.00% makes a surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise


World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise | World Wrestling Entertainment, Inc. Quote

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:

L Brands, Inc. LB has an Earnings ESP of +2.38% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST has an Earnings ESP of +0.50% and a Zacks Rank #3.

Nordstrom, Inc. JWN has an Earnings ESP of + 4.92% and a Zacks Rank #3.

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