What Propelled Time Warner's Shares In The Last One Year?

Time Warner Inc.’s (NYSE:TWX) share have been riding high on strategic investments in video content and technology, digital endeavors and diversification into new market. We observed that the shares of this diversified media conglomerate have outperformed the Zacks categorized Media Conglomerates industry.

In the said time period, the stock has surged 36.9%, while the industry has advanced 10.7%. While the broader Consumer Discretionary sector gained 20.1%. Additionally, the stock’s long-term earnings growth rate of 9.5% and a VGM Score of “B” reflect its inherent strength.

Let’s Delve Deeper

Time Warner’s initiative to foray into new markets has been helping in broadening client base and product portfolio. Management is now concentrating on enhancing reach in the existing territories, through investments in local production and gaining distribution rights for new networks. Moreover, rising demand of its content from distributors and other cable or satellite providers is augmenting the revenues. Moreover, Game of Thrones is all set to return for its highly anticipated seventh season on Jul 16 and will be premiered on HBO.

Time Warner, which accepted the buyout offer of AT&T Inc. (NYSE:T) , is also boosting broadband distribution capabilities. Further, the company has entered into an affiliate agreement for its full suite of networks, comprising TNT, Cartoon Network, CNN and TBS, to be available on Hulu’s live-streaming service. Moreover, the company launched subscription video-on-demand service called FilmStruck, which features the largest streaming library of Contemporary & Classic Arthouse, Indie, Foreign & Cult Films.

Further, Time Warner’s Turner Broadcasting and CBS Corporation (NYSE:CBS) extended the rights to air The National Collegiate Athletic Association ("NCAA") Men's Division I Basketball Tournament, through 2032. With more viewership and higher advertising revenues, the company is well poised for top-line growth.

Additionally, this Zacks Rank #3 (Hold) company has been expanding digital presence to enable consumers to enjoy content in more platforms and devices. All these factors have enabled Time Warner to post better-than-expected bottom-line in 20 straight quarters, as it reported first-quarter 2016 results.

However, decline in overall advertising spending and currency headwinds may adversely impact the company’s performance. Technology advancements, rapid growth in new video services and shift in consumer viewing patterns, may also pose threats.

Stocks to Consider

Better-ranked stocks worth considering include The New York Times Company (NYSE:T) and Pearson (LON:PSON) plc (NYSE:PSO) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

New York Times has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 31.4%.

In the past three months, shares of Pearson have gained nearly 18%.

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