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What's in Store for News Corporation (NWSA) in Q3 Earnings?

Zacks Equity Research

News Corporation NWSA is scheduled to report third-quarter fiscal 2019 numbers on May 9, after the market close. In the trailing four quarters, this diversified media conglomerate has outperformed the Zacks Consensus Estimate, with average positive earnings surprise of 62.3%. In the last-reported quarter, the company delivered a positive earnings surprise of 12.5%.

Which Way Are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for earnings in the quarter under review stands at 4 cents, reflecting year-over-year decline of approximately 33.3%. The consensus mark remained stable over the past 30 days. For revenues, the consensus mark stands at $2496 million, up 19.2% from $2,093 million, reported in the year-ago period. We note that total revenues of this New York-based company increased 20.5% in the last-reported quarter.

News Corporation Price, Consensus and EPS Surprise

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

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

News Corporation's efforts to expand its digital offerings, with greater emphasis on real estate businesses, bode well. Also, the company is diversifying its revenue streams through acquisitions and operational enhancement. The company is also concentrating on augmenting its digital subscriber base. These initiatives are likely to fuel top-line growth.

However, fall in advertising revenues at News and Information Services segment, owing to softness in the print advertising market and headwinds related to foreign currency. remain matters of concern. Advertising revenues at the segment fell 5% year over year during the second quarter of fiscal 2019, due to a dismal print advertising market and decline in News America Marketing revenues. Moreover, the company expects challenges to continue at News America Marketing, mostly related to the FSI advertising in the impending quarter.

Notably, any deleverage in operating costs and SG&A expenses may act as deterrent to the bottom line. The company had earlier hinted a rise in cost at Dow Jones at News and Information Services in the third quarter to drive execution growth initiatives, with increase in live events.

Apart from these, the company remains focused on increasing its digital subscriber base in the wake of sluggish print media trends. In the last-reported quarter, it witnessed persistent increase in digital paid subscriber at The Wall Street Journal. The company is also concentrating on pursuing integrated strategies to take advantage of the transition to digital content from print. It has achieved significant improvement in augmenting digital paid circulation.

What Our Model Says

Our proven model does not conclusively show that News Corp. is likely to beat estimates this quarter. This is because a stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and 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.

News Corporation has a Zacks Rank #3 but Earnings ESP of 0.00%, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.

Lululemon Athletica Inc. LULU has an Earnings ESP of +0.51% and a Zacks Rank #1.

Electronic Arts Inc. EA has an Earnings ESP of +11.35 and a Zacks Rank #1.

Viacom Inc. VIAB has an Earnings ESP of +0.12% and a Zacks Rank #3.

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Viacom Inc. (VIAB) : Free Stock Analysis Report
News Corporation (NWSA) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
Electronic Arts Inc. (EA) : Free Stock Analysis Report
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