Here's Why World Wrestling (WWE) is a Hot Investment Pick
World Wrestling Entertainment, Inc. WWE appears to be a solid bet, given its solid efforts to remain on the growth trajectory. We expect the company to continue gaining from its focus on increasing original content, subscriber growth, rise in TV rights fees and monetization of video content across digital and direct-to-consumer platforms. Driven by these upsides, shares of this Stamford, CT-based company have gained approximately 17% in the past three months compared with the industry’s 4.8% growth.
Let’s delve deeper into the major factors that have been driving this Zacks Rank #2 (Buy) stock’s performance.
Strategic Deals to Increase Revenues
Recently, WWE extended its existing partnership with J SPORTS into its 22nd year with a new deal to broadcast flagship shows, Raw and SmackDown, live in Japan. Also, the company extended its partnership with SKY into its 19th year to continue broadcasting WWE programming in New Zealand.
These apart, WWE had earlier announced a multi-year deals with Fox Sports and USA Network for its flagship programs. These five-year deals for the U.S. distribution of WWE programs will be effective Oct 1, 2019. Per the terms of the agreements, USA Network will continue to air Raw, while SmackDown will be broadcasted on Fridays on the Fox broadcast network.
According to management, these deals will improve the average annual value of WWE’s U.S. distribution to 3.6 times of the contract with NBC Universal. Earlier, management had stated that these agreements will likely bump up revenues from $311 million in 2019 to $462 million in 2021. For 2019, WWE expects adjusted OIBDA of minimum $200 million assuming substantial revenue growth from the latest U.S. deals.
Increase in Subscriber Base
WWE’s number of average paid subscribers increased 9% year over year to more than 1.66 million in the third quarter. During the first nine months of 2018, digital video views surged 61% to 22.9 billion, while hours consumed soared 81% to 842 million across digital and social media platforms. Management projected average paid subscribers of approximately 1.56 million for the final quarter, reflecting an 8% increase from the prior-year period.
In the long haul, the company will continue banking on WWE’s content distribution agreement to expand subscriber base. Penetrating its reach in television, WWE witnessed third fascinating season of Total Bellas; developed a new series, Miz & Mrs. (premiered on Jul 24, 2018); premiered the eighth season of Total Divas and launched new weekly series, NXT UK.
We expect all the aforementioned positives to continue bolstering the company’s performance and help it remain in investors’ good books.
Other Key Picks
News Corporation NWSA delivered average positive earnings surprise of 65.8% in the trailing four quarters. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lions Gate Entertainment Corp. LGF.A delivered average positive earnings surprise of 47.2% in the trailing four quarters. The company carries a Zacks Rank of 2.
Twenty-First Century Fox, Inc. FOXA has a long-term earnings growth rate of 9.3% and a Zacks Rank #2.
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