21st Century Fox (FOXA) Q3 Earnings: What's In The Cards?

Twenty-First Century Fox, Inc. (NASDAQ:FOXA) is scheduled to report third-quarter fiscal 2017 results on May 10. In the previous quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 8.2%. Notably, the company surpassed the Zacks Consensus Estimate by an average of 12.3% in the trailing four quarters. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The question lingering in investors’ minds now is whether Twenty-First Century Fox will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 48 cents, reflecting a year-over-year increase of nearly 2%.

We note that the Zacks Consensus Estimate has witnessed upward revisions in the past 30 days. Analysts polled by Zacks expect revenues of $7,681 million compared with $7,228 million reported in the prior-year quarter.

We note that the stock has underperformed the Zacks categorized Movie/TV-Production/Distribution industry and the S&P 500 in the past one month. The company’s shares have declined 6.8%, compared with the Zacks categorized industry’s fall of 5.7%. Meanwhile, the S&P 500 has witnessed an increase of 2%.

Factors Influencing This Quarter

Robust affiliate fees at the company’s broadcast and cable-television divisions are expected to drive the company’s revenues higher. The performance of Cable Network Programming, which has been magnificent in fiscal 2015 and 2016 owing to rising affiliate fees, continues to impress investors in fiscal 2017 too. In the second quarter, Cable Network Programming revenues jumped 7.1% on the back of robust affiliate and advertising revenues growth, after increasing 10% in first-quarter fiscal 2017.

However, increase in cost at cable segment has been a worry for investors. In second-quarter fiscal 2017, cable segment expenses increased 8%, following a rise of 12% and 15% in the preceding two quarters. The rise in expenses was mostly due to elevated sports programming costs.

The company anticipates costs at Cable Network to go up in fiscal 2017. We believe that an increase in expenses, primarily due to higher sports programming costs may hurt margins and in turn the bottom line in the coming quarters. Further, advertising revenues also remains a concern for most of the media companies this quarter.

What Does the Zacks Model Unveil?

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

Twenty-First Century Fox has an Earnings ESP of -6.25% as the Most Accurate estimate is 45 cents, while the Zacks Consensus Estimate is pegged higher at 48 cents. Although, the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

Stocks Poised to Beat Earnings Estimates

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

Nexstar Media Group, Inc. (NASDAQ:NXST) currently has an ESP of +29.63% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lions Gate Entertainment Corp. LGF.A has an ESP of +6.06% and has a Zacks Rank #3.

Tribune Media Company (NYSE:TRCO) has an ESP of +28.57% and carries a Zacks Rank #3.

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