Gannett (GCI) To Report Q2 Earnings: Can It Pull A Surprise?

Diversified publishing conglomerate, Gannett Co., Inc. (NYSE:GCI) is expected to report second-quarter 2016 results on Jul 27. In the previous quarter, the company’s earnings surpassed the estimate by a whopping 141.7%. Notably, the company’s earnings have surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with an average surprise of 36.1%.

Earnings Whispers

Our proven model does not conclusively show that Gannett 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. Gannett has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 30 cents. The company carries a Zacks Rank #2 (Buy), which when combined with ESP of 0.00%, makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing This Quarter

Gannett is realigning its cost structure and streamlining its operations to increase efficiencies and safeguard its earnings and cash flows from dwindling print advertising revenues. It is also focused on improving its digital business and has undertaken strategic acquisitions.

However, the company’s advertising as well as circulation revenues need to be emphasised upon. Notably, Gannett’s advertising and circulation revenues declined 11.6% and 3.2%, respectively, in the first quarter, in turn hampering overall top-line growth. The company apprehends a 5–7% fall in adverting revenues, while circulation revenues are likely to dip by 2–4% in 2016.

Stocks Poised to Beat on Earnings Estimates

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

Thomson Reuters Corp. (TO:TRI) has an Earnings ESP of +4.17% and a Zacks Rank #2 (Buy).

Amazon.com, Inc. (NASDAQ:AMZN) has an Earnings ESP of +37.72% and a Zacks Rank #3 (Hold).

Time Warner Inc. (NYSE:TWX) has an Earnings ESP of +0.87% and a Zacks Rank #3 (Hold).