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What Awaits Warner Bros. Discovery (WBD) in Q2 Earnings?

·5 min read

Warner Bros. Discovery WBD is set to report second-quarter 2022 results on Aug 4.

On Apr 8, Discovery and AT&T's Warner Media unit completed the previously announced merger to form a combined company, Warner Bros. Discovery.

For the quarter, the Zacks Consensus Estimate for earnings has moved up 200% in the past 30 days to 3 cents per share. The figure indicates a 96.3% decline from the year-ago quarter’s reported figure.

The consensus mark for revenues is pegged at $11.6 billion, implying a 278.6% increase from the year-ago quarter’s reported figure.

The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, missing the same in one. Warner Bros. Discovery has a trailing four-quarter negative earnings surprise of 0.59%, on average.

Let’s see how things have shaped up for this announcement.

Warner Bros. Discovery, Inc. Price and EPS Surprise

Warner Bros. Discovery, Inc. Price and EPS Surprise
Warner Bros. Discovery, Inc. Price and EPS Surprise

Warner Bros. Discovery, Inc. price-eps-surprise | Warner Bros. Discovery, Inc. Quote

Factors to Consider

Warner Bros. Discovery’s second-quarter 2022 performance is expected to have witnessed a slow but steady ad-spending environment. The company generates more than 50% of its revenues from advertising.

The company boasts a strong non-fiction content portfolio. The increasing availability of its content across linear, digital over-the-top platforms like Hulu and Sling TV is expected to have improved traffic. Steady demand for unscripted content is likely to have contributed to Dplay’s performance.

Warner Bros. Discovery is expected to have benefited from steady viewership of multiple channels, including Discovery Channel, Animal Planet, Food Network, HGTV, MotorTrend, Science, TLC, ID, Oprah, Eurosport, the Cooking Channel and UKTV Lifestyle.

In the to-be-reported quarter, the resumption of sporting events globally is expected to have boosted growth for Eurosport, which was renamed Discovery Sports Events.

Discovery+ is off to an impressive start. Discovery+ ended the first quarter of 2022 with 24 million paying direct-to-consumer subscribers. Discovery+ became a sister service to AT&T's WarnerMedia's HBO Max in April 2022, following the merger with Discovery into Warner Bros.

The company launched Discovery+ on Comcast Xfinity and Amazon prime video Channels in the United States, Starzplay in MENA and Samsung Smart TVs and Amazon Fire TV devices in the U.K. and Ireland.

The availability of Discovery+ on LG Smart TVs in Canada, including LG’s lineup of award-winning LG OLED TVs and LG QNED MiniLED TVs, is expected to have aided the top line in the to-be-reported quarter.

International revenues are likely to have been boosted by an improvement in the ad-spending environment, particularly in the U.K., Italy, Germany and Poland.

However, incremental spending on direct-to-consumer initiatives (marketing and content costs) is expected to have hurt profitability in the second quarter.

Key Q2 Announcements

Warner Bros. Discovery announced that it will launch two new streaming advertising products with the connected TV technology company, BrightLine. The two new advanced advertising products, Click-to-Contact and Viewer’s Choice, will be available on discovery+ beginning in fourth quarter 2022 and will be offered to clients in the 2022-23 Upfront season.

What Our Model Says

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Warner Bros. Discovery has an Earnings ESP of +772.73% and currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

MRC Global MRC, Alcon ALC and Grocery Outlet GO are some other stocks, which also have the right combination of elements to post an earnings beat in their upcoming releases.

MRC Global is slated to report second-quarter 2022 results on Aug 8. The company has an Earnings ESP of +30.27% and a Zacks Rank #1 at present. MRC's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 140.8%. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MRC’s quarterly earnings is pegged at 25 cents per share, suggesting a whopping year-over-year surge of 212.5%. Its quarterly revenues are estimated to increase 23.4% year over year to $846.5 million.

Alcon has an Earnings ESP of +5.07% and a Zacks Rank #1. The company is scheduled to report second-quarter 2022 results on Aug 16. ALC's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 21.4%.

For the second quarter, the Zacks Consensus Estimate for Alcon’s earnings is pegged at 55 cents per share, indicating a 1.8% year-over-year decline. However, revenues are expected to grow 4.4% to $2.19 billion.

Grocery Outlet has an Earnings ESP of +5.62% and sports a Zacks Rank #1. The company is slated to report its second-quarter 2022 results on Aug 9. Its earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 4.8%.

The Zacks Consensus Estimate for GO’s second-quarter earnings stands at 24 cents per share, suggesting a year-over-year increase of 4.4%. GO anticipates revenues of $859.6 million, which suggests growth of 10.8% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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