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Factors Shaping Up World Wrestling's (WWE) Q1 Earnings

Zacks Equity Research

World Wrestling Entertainment, Inc. WWE is scheduled to report first-quarter 2019 numbers on Apr 25, before the opening bell. Notably, in the trailing four quarters, the company has outperformed the Zacks Consensus Estimate, recording average positive earnings surprise of 32.5%. In the last reported quarter, the company delivered a positive earnings surprise of 37.5%. Let’s see what awaits this quarterly release.

How Are Estimates Trending?

The Zacks Consensus Estimate for the first quarter is pegged at a loss of 1 cent, reflecting significant decline from earnings of 18 cents reported in the year-ago quarter. The consensus mark has remained stable over the past 30 days. For revenues, the consensus estimate stands at $197.3 million, up more than 5% from the year-ago quarter’s reported figure.

World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise

World Wrestling Entertainment, Inc. Price, Consensus and EPS Surprise | World Wrestling Entertainment, Inc. Quote

Factors to Consider

WWE is focused on increasing original content, subscriber growth, rising TV rights fees and monetization of video content across digital as well as direct-to-consumer platforms. Also, the company has been implementing strategies including the execution of customer acquisition and retention programs, increase in distribution platform, introduction of new features and foraying into new regions. These initiatives are likely to boost revenues in the impending results.

Apart from these, WWE extended its existing partnership with Mars. Per the deal, two famous brands of Mars — SNICKERS and SKITTLES — will obtain prominence and customer engagement across WWE’s global platforms. Also, the company extended its existing partnership with J SPORTS and SKY.

However, possibilities of lower ticket sales during live events or a drop in the number of live events as well as an uptick in costs at WWE Network pose concerns. We note that the company had earlier guided first-quarter 2019 adjusted OIBDA in the band $9-$14 million, down significantly from $35.2 million, reported in the prior year quarter. Management hinted that the said range as well as the expected performance through the third quarter, reflects year-over-year decline because increased content rights fees are likely to be offset by higher fixed costs.

What Our Model Says

Our proven model does not show that WWE is likely to beat estimates in first-quarter 2019. This is because a stock needs to have — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) as well as a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

WWE has a Zacks Rank #2 but its Earnings ESP of 0.00% makes surprise prediction difficult.

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 deliver an earnings beat.

Ross Stores, Inc. ROST has an Earnings ESP of +2.20% and a Zacks Rank #3.

Big Lots, Inc. BIG has an Earnings ESP of +0.92% and a Zacks Rank #3.

Viacom Inc. VIAB has an Earnings ESP of +0.44% and a Zacks Rank #3.

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Viacom Inc. (VIAB) : Free Stock Analysis Report
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