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Factors Setting the Tone for News Corp (NWSA) in Q3 Earnings

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MGIC (MTG) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

News Corporation NWSA is slated to report third-quarter fiscal 2018 results on May 10. In the trailing four quarters, this diversified media conglomerate beat the Zacks Consensus Estimate by an average of 93.4%.

Which Way Are Estimates Treading?

In order to get a clear picture of what analysts expect from the company’s earnings release, let’s take a look at the earnings estimate revisions.

The Zacks Consensus Estimate for third-quarter earnings, which has gone down by a penny over the past 30 days, is in line with the prior-year quarter’s 7 cents. Further, analysts polled by Zacks expect revenues of $1,978 million, flat year over year.

News Corporation Price, Consensus and EPS Surprise

 

News Corporation Price, Consensus and EPS Surprise | News Corporation Quote

 

Factors Influencing Q3

News Corp remains vulnerable to foreign currency headwinds and soft print advertising demand. Advertising revenues in the News and Information Services segment fell during the second quarter of fiscal 2018 due to soft home delivered revenues at News America Marketing, mainly attributable to two fewer free-standing inserts as well as lower custom publishing revenues. Also, softness in the print advertising market along with the decision to stop The Wall Street Journal’s international print editions in the quarter impacted the results.

Management had earlier highlighted that FOX SPORTS Australia is likely to struggle against higher costs during the third quarter due to the amortization of NRL rights throughout the year.

Analysts polled by Zacks anticipate revenues from the News and Information Services division to decline 3.3%. However, revenues in Cable Network Programming and Digital Real Estate Services segments are expected to increase 7.4% and 10.9%, respectively. The Book Publishing division is expected to remain roughly flat with the year-ago quarter.

Meanwhile, News Corp is diversifying its revenue streams through strategic acquisitions and operational enhancement. The company is expanding its digital offerings, emphasizing on real estate businesses and augmenting digital subscriber base. Further, it has been focusing on cost cutting.

What the Zacks Model Unveils?

Our proven model does not conclusively show that News Corp is likely to beat earnings estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

News Corp has an unfavorable combination of a Zacks Rank #4 (Sell) and an Earnings ESP of -30.77%.

Stocks With Favorable Combination

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

Walmart WMT has an Earnings ESP of +2.46% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target TGT has an Earnings ESP of +0.32% and a Zacks Rank #3.

Kroger KR has an Earnings ESP of +4.99% and a Zacks Rank #3.

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