CBS To Report Q1 Earnings: Will Solid Content Portfolio Aid?

CBS Corporation (NYSE:CBS) is slated to report first-quarter 2019 results on May 2.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 3.3%.

In the last reported quarter, the company’s adjusted earnings of $1.50 per share increased 25% from the year-ago quarter but missed the Zacks Consensus Estimate by 3 cents. Revenues increased 2.6% year over year to $4.02 billion but missed the consensus mark of $4.16 billion.

The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $4.32 billion, indicating growth of 15% from the year-ago reported figure. The consensus mark for earnings has been steady at $1.4 per share over the past seven days, indicating growth of 4.5% from the year-ago period reported figure.

CBS Corporation Price and EPS Surprise

Key Factors Likely to Influence Q1 Results

CBS’ strong content slate along with the broadcast of popular events on its Television Network and over-the-top (OTT) services are likely to drive first-quarter 2019 results.

The company’s Television Network was accessed by about 20 million viewers in the last quarter owing to the Grammy’s event. Additionally, CBS All Access witnessed 24% growth in unique viewers and time spent on the platform also increased due to the popularity of the event.

Moreover, strength of CBS Sports HQ’s unique content led to increase in the number of unique viewers on the platform in the to-be-reported quarter. Notably, the service attracted more than one million unique viewers on a single day in February, setting a new record.

Further, its OTT services — CBS All Access and Showtime — showcased new content in first-quarter 2019. This is likely to boost ad revenues and drive subscriber growth.

This apart, CBS’ partnership with Canvs is expected to boost its premium content offerings. Notably, Canvs is a start-up that has expertise in emotion measurement and uses artificial intelligence (AI) and machine learning technologies to unlock the power of customer insights from its surveys.

The company’s solid premium content may help it license more content to third-party content providers, in line with CBS’ expectation to increase its content licensing activities in the to-be-reported quarter. This is likely to aid content licensing revenues.

However, lack of political advertising revenues may hurt the top line in first-quarter 2019. Notably, advertising revenues, which remained the main contributor to total revenues, witnessed growth owing to higher political advertising sales in fourth-quarter 2018.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

CBS has a Zacks Rank #3 and an Earnings ESP of -3.68%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post earnings beat this quarter:

SeaWorld Entertainment, Inc. (NYSE:SEAS) has an Earnings ESP of +16% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rent-A-Center, Inc. (NASDAQ:RCII) has an Earnings ESP of +22% and a Zacks Rank #1.

Electronic Arts Inc. (NASDAQ:EA) has an Earnings ESP of +16.3% and a Zacks Rank #1.

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