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What's in Store for AMC Networks (AMCX) in Q1 Earnings?

Leading media company in the U.S., AMC Networks Inc. AMCX, is scheduled to report first-quarter 2016 financial numbers on May 5, before the opening bell.

Last quarter, AMC Networks recorded a 6.50% positive earnings surprise. Moreover, the company’s earnings have the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 18.04%.

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

Factors Likely to Influence This Quarter

AMC Networks’ strength lies in programs with original content for which it holds ownership rights. In this regard, shows like Breaking Bad and Mad Men have been major hits, driving commercial success for the company. Also, Fear the Walking Dead, its spin-off show from the popular The Walking Dead series, has been a runaway hit.

Thus, the rising popularity of original content programs coupled with inclusion of other popular TV shows should rake in more advertisement revenues for the company in the to-be-reported quarter.

On the flip side, severe competitive threat from over-the-top (OTT) online video streaming service providers and other media companies coupled with the recent trend of the bulk of ad revenues skewed toward Internet TV is a factor which may mar the quarter’s performance.

Earnings Whispers

Our proven model does not conclusively show that AMC Networks is likely to beat the Zacks Consensus Estimate 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: AMC Networks has an earnings ESP of -2.14%. This is because the Most Accurate estimate stands at $1.83 while the Zacks Consensus Estimate is pegged higher at $1.87.

Zacks Rank: AMC Networks has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

TiVo Inc. TIVO has an earnings ESP of +25.00% and a Zacks Rank #1.

Cinemark Holdings, Inc. CNK has an earnings ESP of +2.13% and a Zacks Rank #2.

Tribune Media Company TRCO has an earnings ESP of +3.45% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
TRIBUNE MEDIA (TRCO): Free Stock Analysis Report
 
TIVO INC (TIVO): Free Stock Analysis Report
 
CINEMARK HLDGS (CNK): Free Stock Analysis Report
 
AMC NETWORKS- A (AMCX): Free Stock Analysis Report
 
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