Publishing Stocks To Watch For Earnings On Jul 21: MNI, SCHL

After navigating brazenly through the rough tide caused by Brexit, investors are again geared up for the Q2 reporting cycle, which is in its nascent stage, with a handful of S&P 500 stocks having reported their results so far. Per the latest Zacks Earnings Trends report as of Jul 15, out of the 36 S&P 500 members that have come up with their quarterly numbers, approximately 66.7% have posted positive earnings surprises, while 41.7% beat top-line expectations.

According to the report, earnings for the 36 S&P 500 companies that have reported so far are down 3.9% from the same period last year, while revenues have dipped 0.1%.

The report further projects that earnings for the total S&P 500 companies will decline 5.4% from the year-ago period, and total revenue will dip 0.5%. We observe that this will be the fifth straight quarter, if the index witnesses a decline in earnings. Well, as the earnings season gradually gets into full swing, the scenario would be much more prominent. So don’t be in a rush to count your chickens before they hatch.

The performance of the index is not restricted to a single sector, and of the 16 Zacks sectors, 9 are expected to witness an earnings decline in Q2, with Basic Materials, Industrial Products, Oil/Energy, Technology and Transportation being a big drag. The Consumer Staples sector also portrays a soft trend. Total earnings for the sector are expected to drop 3%; however, revenues are projected to increase marginally by 0.3%. Publishing forms part of the Consumer Staples sector.

Among publishing stocks lined up to report, let’s take a sneak peek at two companies.

The McClatchy Company (NYSE:MNI) , the newspaper publisher, is slated to report second-quarter 2016 results on Jul 21. Our proven model does not conclusively show that McClatchy is likely to beat 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. McClatchy has an ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 54 cents. The company sports a Zacks Rank #1, which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

In the trailing four quarters, this Sacramento, CA-based company outperformed the Zacks Consensus Estimate by an average of 120.6%.

Another publishing stock, Scholastic Corporation (NASDAQ:SCHL) is expected to report fourth-quarter fiscal 2016 results on Jul 21. This publisher and distributor of children's books has an Earnings ESP of 0.00% and a Zacks Rank #1. The Zacks Consensus Estimate for the quarter currently stands at 95 cents.

In the trailing four quarters, this New York-based company outperformed the Zacks Consensus Estimate by an average of 15.8%.