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Viacom (VIAB) Q2 Earnings May Disappoint: Will Stock Suffer?

Viacom Inc. VIAB is set to release second-quarter 2016 results, before the opening bell on Apr 28.

In the last quarter, the company posted a 0.85% earnings surprise. Let’s see how things are shaping up for this announcement.


Factors at Play

Lack of popular movie releases is likely to hurt the company’s Film segment. In addition, enhanced geographic presence will increase the foreign currency exchange rate risks for Viacom. Moreover, mounting programming expenses may further impact margins while moving ahead.

In addition, the cable TV industry in the U.S. is highly matured and saturated. Viacom’s flagship cable channels are already distributed and therefore chances of revenue enhancement through the means of distribution channel expansion are much limited.

Earnings Whispers

Our proven model does not conclusively show that Viacom 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 at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for the company currently stands at -11.11% as the Most Accurate estimate is pegged at 72 cents while the Zacks Consensus Estimate is higher at 81 cents.

Zacks Rank: Viacom carries a Zacks Rank #4. Please note that 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 momentum.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Sirius XM Holdings Inc. SIRI has an earnings ESP of +33.33% and a Zacks Rank #3.

Time Warner Inc. TWX has an earnings ESP of +3.13% and a Zacks Rank #3.

AMC Entertainment Holdings, Inc. AMC has an earnings ESP of +5.56% 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
 
TIME WARNER INC (TWX): Free Stock Analysis Report
 
SIRIUS XM HLDGS (SIRI): Free Stock Analysis Report
 
VIACOM INC-B (VIAB): Free Stock Analysis Report
 
AMC ENTERTAINMT (AMC): Free Stock Analysis Report
 
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