Media Stocks Q1 Earnings Lineup For May 3: CBS & WWE

The first-quarter 2018 earnings season has passed the halfway mark with more than 267 S&P 500 members having already reported their quarterly numbers.

Per latest Earnings Preview (Apr 27), total earnings of these companies are up 25.1% on a year-over-year basis (76.8% of the companies beat EPS estimates) while total revenues are up 10.7% on a year-over-year basis (73.8% of the companies beat top-line estimates).

Overall first-quarter earnings for S&P 500 companies are anticipated to be up 22.6% from the year-ago quarter on revenues that are estimated to increase 8.4%. This will fare better than growth of 13.4% in fourth-quarter earnings on 8.6% higher revenues and also be on track to reach its highest level in seven years.

Growth is expected to be broad-based, with double-digit earnings improvement expectation for 13 out of the 16 Zacks Sector, including Consumer Discretionary. The sector, which primarily comprises retail stocks, has been plagued by ever expanding presence of Amazon (NASDAQ:AMZN) .

Cord-Cutting Keeps Media Under Strain

Media also forms a significant part of the Consumer Discretionary sector. The industry has been suffering from relentless cord-cutting and stiff competition from streaming services like Netflix (NASDAQ:NFLX), Hulu, HBO and Amazon Prime.

This was evident from first-quarter results announced by well-known media companies like Comcast (NASDAQ:CMCSA) and Charter Communications (NASDAQ:CHTR) .

Comcast lost 96K video customers and 54K voice customers in the first-quarter. (Read More: Comcast Beats on Q1 Earnings, Submits Bid for Sky)

Meanwhile, Charter lost 112K and 25K video and voice subscribers, respectively. (Read More: Charter Communications Q1 Earnings & Revenues Beat)

Here we take a look at two media companies that are set to report on May 3.

CBS Corporation (NYSE:CBS) remains highly vulnerable to the advertising market as it derives a major portion of revenues (42% of 2017 total revenues) from the sale of advertising on its broadcast and cable networks and television, syndicated programming as well as online properties.

However, we believe the company is likely to gain from increasing demand for content, rise in retransmission rates, expansion of direct-to-consumer business, sturdy digital presence, upfront fees from traditional distribution partners and higher international content licensing fees. (Read More: CBS to Report Q1 Earnings: Advertising Growth Holds the Key)

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.19. The figure has remained unchanged over the past seven days and reflects 14.4% year-over-year growth.

However, CBS has an unfavorable combination of a Zacks Rank #3 (Hold) and an Earnings ESP of -0.0.3%, which shows that the company is unlikely to deliver a positive surprise this quarter.

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 has a good chance of beating estimates if it also has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

The sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Meanwhile, World Wrestling Entertainment’s (NYSE:WWE) first-quarter 2018 results are expected to be driven by the company’s initiatives like the development of fresh content, execution of customer acquisition and retention programs, increase in distribution platform, introduction of features and foraying into new locations.

Nevertheless, the company’s home entertainment content revenues have been declining due to consumers’ persistent shift to digital formats, downloaded or streamed over the Internet. (Read More: How World Wrestling Looks Just Ahead of Q1 Earnings)

The Zacks Consensus Estimate for first-quarter earnings is pegged at 13 cents per share. The figure has remained unchanged over the past seven days and reflects 62.5% year-over-year growth.

However, World Wrestling has an unfavorable combination of a Zacks Rank #2 and an Earnings ESP of 0.00%.

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