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Discovery (DISCA) to Report Q4 Earnings: What's in Store?

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Discovery DISCA is set to report fourth-quarter 2021 results on Feb 24.

For the quarter, the Zacks Consensus Estimate for earnings has moved south by a cent in the past 30 days at 89 cents per share. The figure indicates a 17.11% decline from the year-ago quarter’s reported figure.

The consensus mark for revenues is pegged at $3.13 billion, calling for an 8.31% 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 the remaining one. Discovery has a trailing four-quarter negative earnings surprise of 0.69%, on average.

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

Discovery, Inc. Price and EPS Surprise

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

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

Factors to Consider

Discovery’s fourth-quarter 2021 performance is expected to have benefited from an improved ad-spending environment. The company generates more than 50% of its revenues from advertising.

Discovery 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. Strong demand for unscripted content is likely to have contributed to Dplay’s performance.

The company is expected to have benefited from solid 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 December, Giada De Laurentiis, the Emmy award-winning chef and New York Times best-selling author, signed a new exclusive agreement with Food Network. Under the agreement, Giada will continue to front and produce content for the linear network and the streaming service discovery+. This is expected to enhance Discovery’s viewership.

The resumption of sporting events globally is expected to have boosted growth for Eurosport, which was renamed as Discovery Sports Events during the third quarter.

Discovery+ is off to an impressive start. Discovery+ ended the fourth quarter with 20 million, paying direct-to-consumer subscribers. 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.

At the beginning of the fourth quarter, Discovery and LG Electronics USA announced that Discovery+ is now available on LG Smart TVs in the United States, including LG’s line-up of award-winning LG OLED TVs and LG QNED Mini LED TVs. Discovery announced the launch of its direct-to-consumer offering across app stores and platforms in the Philippines. The company also announced the launch of Discovery+ in Canada. This is expected to have aided the top line in the to-be-reported quarter.

International revenues are likely to have been boosted from improving ad-spending environment, particularly in the U.K., Italy, Germany and Poland. The launch of Discovery+ in the U.K. for Vodafone’s mobile market is expected to have aided subscriber growth.

During the to-be-reported quarter, Discovery announced the launch of Discovery+ in Brazil. Discovery+ will provide viewers in Brazil with more than 25.000 unreleased episodes and titles across all genres.

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

Q4 Highlights

During the end of the fourth quarter, Discovery received approval from the European Commission for its proposed acquisition of AT&T’s T Warner Media business.

Discovery anticipated closing the AT&T’s Warner Media transaction by mid-2022, subject to approval by Discovery stockholders and additional customary closing conditions, including other regulatory approvals

On Dec 15, Discovery entered into a strategic partnership with SiriusXM SIRI to create content per consumers’ changing preferences and values, providing them with subscription offers that deliver the best content from both companies.

Eligible existing and new subscribers to SiriusXM’s Platinum VIP plan will be able to activate a 12-month complimentary subscription to Discovery+

On Oct 21, Discovery announced a new agreement with Cox Communications wherein Discovery+ has been made available for Cox customers for purchase on Cox Contour 2 and the Contour Stream Player.

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. But that’s not the case here.

Discovery has an Earnings ESP of -1.32% and carries a Zacks Rank #3, currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stock to Consider

Here is a stock you may want to consider, as our model shows that this also have the right combination of elements to post an earnings beat in their upcoming releases:

PlayAGS AGS has an Earnings ESP of +36.68% and a Zacks Rank #2. The company is set to announce fourth-quarter 2021 results on Mar 10. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGS is down 6.6% in the past year against the Zacks Gaming industry’s decline of 35.3% and the Consumer Discretionary sector’s fall of 24.7% in the past year.

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

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AT&T Inc. (T) : Free Stock Analysis Report

Sirius XM Holdings Inc. (SIRI) : Free Stock Analysis Report

Discovery, Inc. (DISCA) : Free Stock Analysis Report

PlayAGS, Inc. (AGS) : Free Stock Analysis Report

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