Will Q3 Earnings Hold A Surprise For Nielsen (NLSN) Stock?

Nielsen Holdings N.V. (NYSE:NLSN) is set to report third-quarter 2016 results on Oct 25. Last quarter, the company posted a negative earnings surprise of 2.90%. Moreover, Nielsen surpassed the Zacks Consensus Estimate in three out of the last four quarters, with an average positive surprise of 1.49%.

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

Factors at Play

Nielsen is an information and measurement company which offers media and marketing information on what consumers watch and buy on a global and local basis. The company reported weak quarterly results with both earnings and revenues missing the Zacks Consensus Estimate. However, revenues were up 2.4% year over year on the back of solid performance by the company’s Buy and Watch businesses.

Regular dividend payment and share repurchase program reflect Nielsen’s financial strength and commitment to return value to shareholders. Also, the company's new products are doing well and should drive revenues in the upcoming quarter.

However, continued investments in technology and infrastructure could weigh on margins and profitability in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Nielsen is likely to beat on earnings this quarter. That 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. That is not the case here as you will see below.

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 71 cents. Therefore, Earnings ESP for Nielsen is 0.00%.

Zacks Rank: Nielsen has a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

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

Stock to Consider

Here are some stocks which you may consider instead, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Ashford Hospitality Prime, Inc. (NYSE:AHP) , with an Earnings ESP of +9.76% and a Zacks Rank #1. The company is slated to report third-quarter earnings results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alibaba Group Holding Limited (NYSE:BABA) with an Earnings ESP of +2.13% and a Zacks Rank #1. The company is slated to report second-quarter fiscal 2017 earnings results on Nov 2.

Avon Products Inc. (NYSE:AVP) with an Earnings ESP of +33.33% and a Zacks Rank #1. The company is slated to report third-quarter earnings results on Nov 3.

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