Factors To Influence News Corporation's (NWSA) Q2 Earnings

News Corporation (NASDAQ:NWSA) is slated to report second-quarter fiscal 2019 results on Feb 7. In the trailing four quarters, this diversified media conglomerate has outperformed the Zacks Consensus Estimate, with average positive earnings surprise of 65.8%.

Which Way are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for earnings in the quarter under review stands at 16 cents, reflecting year-over-year decline of 33.3%. We also note that the Zacks Consensus Estimate has gone down by 3 cents in the past 30 days. However, News Corporation has a remarkable history, at least in terms of the bottom line. The company delivered eighth straight quarter of positive earnings surprise during first-quarter fiscal 2019.

The Zacks Consensus Estimate for revenues is $2,599 million, up approximately 19.2% from $2,180 million in the year-ago quarter. We note that total revenues of this New York-based company increased 23% in the last reported quarter.

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

News Corporation Price and EPS Surprise

Factors to Consider

News Corporation's efforts to expand its digital offerings, with greater emphasis on real estate businesses, bode well. The company has been also concentrating on cost cutting and augmenting digital subscriber base. It is in a transitionary phase, looking to diversify its revenue streams through buyouts and operational enhancement. These initiatives are likely to mitigate the impact of sluggish print advertising demand.

We note that advertising revenues at News and Information Services segment fell 7% year over year during the first quarter of fiscal 2019, owing to softness in the print advertising market primarily in Australia and the U.K., and lower home delivered revenues.

Treading on a similar path as its rival New York Times (NYSE:NYT) , News Corporation focuses on augmenting its digital subscriber base in the wake of sluggish print media trends. In the last reported quarter, the company witnessed sturdy paid digital subscriber growth at The Wall Street Journal, The Times and Sunday Times, and The Australian. Also, the company’s total subscriber base continues to be dominated by digital subscribers.

Digital revenues accounted for roughly 33% of News and Information Services segment revenues in the first quarter of fiscal 2019 compared with 27% in the year-ago period. Encouraged by this, management projects strong digital subscription growth in the near future. Additionally, the company is all set to launch sports only OTT products in a bid to channelize new revenue streams.

What Does the Zacks Model Say?

Our proven model does not conclusively show that News Corporation is likely to beat estimates 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.

Although News Corporation has a Zacks Rank #2, its Earnings ESP of -18.75% makes surprise prediction difficult.

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 an earnings beat:

World Wrestling Entertainment, Inc. (NYSE:WWE) has an Earnings ESP of +26.31% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gannett Co, Inc. (NYSE:GCI) has an Earnings ESP of +5.88% and a Zacks Rank #3.

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