We expect mass media company CBS Corporation (CBS) to beat expectations when it reports second-quarter 2013 results on Jul 31, 2013.
Why a Likely Positive Surprise?
Our proven model shows that CBS Corporation is likely to beat earnings because it has the right combination of two key components.
Positive Zacks ESP: CBS Corporation currently has an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +1.39%. This is because the Most Accurate Estimate stands at 73 cents, while the Zacks Consensus Estimate is pegged at 72 cents.
Zacks Rank #2 (Buy): Note that stocks with a Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
The combination of CBS Corporation’s Zacks Rank #2 (Buy) and +1.39% ESP makes us very confident regarding an earnings beat on Jul 31.
What is Driving the Better-than-Expected Earnings?
CBS Corporation is focused on lowering its dependency on advertising and is laying more emphasis on increasing subscription based revenue channels. We expect the company to benefit from reverse compensation from affiliates, strong demand of its content, digital distribution, syndication sales and retransmission consent. Alongside, CBS Corporation further strengthened its ties with Netflix, Inc. (NFLX) by extending its multiyear streaming video deal for select library content. These measures facilitate CBS in monetizing its content.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
The Gap, Inc. (GPS) has an Earnings ESP of +1.70% and a Zacks Rank #1 (Strong Buy).
Five Below, Inc. (FIVE) has an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).
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