Will News Corp (NWSA) Earnings Disappoint This Quarter?


News Corporation (NWSA), a diversified media and information services conglomerate, is slated to report fourth-quarter fiscal 2014 results on Aug 7. In the last quarter, it posted a positive surprise of 266.7%. Let’s see how things are shaping up for this announcement.

Factors Influencing the Quarter

Advertising, which forms a major part of News Corporation’s total revenue, is highly vulnerable to the economic conditions. Another hindrance to growth might come from the company's inability to renew sports programming rights under favorable terms. However, the company’s diverse revenue streams hedge it against economic cycles.

The company derives revenues from subscriptions, copy circulation, licensing and affiliate fees, direct sales and advertising and sponsorships. The company is also concentrating on pursuing integrated strategies to take advantage of the transition to digital content from print.

Earnings Whispers

Our proven model does not conclusively show that News Corporation 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 or 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for News Corporation is -25.00%. This is because the Most Accurate estimate stands at 3 cents, while the Zacks Consensus Estimate is pegged at 4 cents.

Zacks Rank: News Corporation’s Zacks Rank #4 (Sell) lowers the predictive power of ESP. We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements:

Chipotle Mexican Grill, Inc. (CMG) has an Earnings ESP of +0.79% and a Zacks Rank #1 (Strong Buy).

Abercrombie & Fitch Co. (ANF) has an Earnings ESP of +20.00% and a Zacks Rank #2 (Buy).

Macy’s, Inc. (M) has an Earnings ESP of +1.16% and a Zacks Rank #3 (Hold).

Read the Full Research Report on NWSA
Read the Full Research Report on CMG
Read the Full Research Report on M
Read the Full Research Report on ANF

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