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Will World Wrestling (WWE) Q4 Earnings Increase Y-o-Y?

Zacks Equity Research

World Wrestling Entertainment, Inc. WWE is scheduled to report fourth-quarter and full-year 2018 numbers on Feb 7, before the opening bell. We note that in the trailing four quarters, the company has outperformed the Zacks Consensus Estimate, recording average positive earnings surprise of 24.4%. In the last reported quarter, the company delivered a positive earnings surprise of 66.7%.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 32 cents, reflecting 52.4% growth from the year-ago quarter. Over the past 30 days, the consensus mark has gone up by 3 cents. For revenues, the consensus estimate stands at $252.9 million, up approximately 19.5% 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

Which Factors Hold Key to WWE’s Performance?

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. Earlier, management had projected significant revenue growth in the final quarter on account of rise in content rights fees and the positive timing of licensing revenues related to the implementation of a new FASB standard (ASC Topic 606).

The company had previously forecast fourth-quarter adjusted OIBDA in the band $45-$55 million. For 2018, it continues to estimate adjusted OIBDA in the $160-$170 million range. Also, management envisions average paid subscribers of approximately 1.56 million for the final quarter, reflecting an 8% increase from the prior-year period.

To remain on growth track, this Stamford, CT-based company has put into place a number of initiatives. 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 multi-year deals with Fox Sports and USA Network for its flagship programs. 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.

Meanwhile, management is strengthening and expanding WWE Network through creation of new content along with implementation of programs that will have higher customer attraction and retention power. Further, the introduction of new features, expansion of distribution platforms and foraying into new regions will boost the company’s performance. The commencement of Greatest Royal Rumble event in Saudi Arabia, under a 10-year partnership with the Kingdom, is likely to contribute significantly to the company’s overall revenues and adjusted OIBDA.

What Does the Zacks Model Say?

Our proven model does conclusively show that WWE is likely to beat estimates during this quarter. 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.

WWE’s Zacks Rank #1 combined with an Earnings ESP of +26.31% makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

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

Discovery, Inc. DISCA has an Earnings ESP of +10.75% and a Zacks Rank #2.

Charter Communications, Inc. CHTR has an Earnings ESP of +32.56% and a Zacks Rank #3.

Gannett Co. GCI has an Earnings ESP of +5.88% and a Zacks Rank of #3.

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