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How Time Warner (TWX) Looks Just Ahead of Q2 Earnings

Time Warner Inc. TWX, which accepted the buyout offer of AT&T, Inc., is slated to report second-quarter 2017 results before the market opens, on Aug 2. In the trailing four quarters, this media and entertainment company has outperformed the Zacks Consensus Estimate by an average of 16.5%. In the preceding quarter, the company witnessed a positive earnings surprise of 15.3%. 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 $1.19 down from $1.29 reported in the year-ago period. We note that the Zacks Consensus Estimate has increased by a penny in the past seven days. Analysts polled by Zacks expect revenues of $7,340 million, up about 6% 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 revenues for the sector are anticipated to increase by 8.1%, while earnings are expected to remain flat.

Time Warner Inc. Price, Consensus and EPS Surprise


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

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.

What Does the Zacks Model Suggest?

Our proven model shows that Time Warner is likely to beat earnings estimates this quarter. 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. The Most Accurate estimate stands at $1.21 and the Zacks Consensus Estimate is pegged at $1.19. So the ensuing +1.68% ESP and the company’s Zacks Rank #2 makes us reasonably confident of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks with Favorable Combination

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

Lions Gate Entertainment Corp. LGF.A has an Earnings ESP of +14.82% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Discovery Communications, Inc. DISCA has an Earnings ESP of + 1.41% and a Zacks Rank #3.

AMC Networks Inc. AMCX has an Earnings ESP of +1.42% and a Zacks Rank #3.

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Time Warner Inc. (TWX): Free Stock Analysis Report
AMC Networks Inc. (AMCX): Free Stock Analysis Report
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Lions Gate Entertainment Corporation (LGF.A): Free Stock Analysis Report
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