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Viacom (VIAB) Q4 Earnings: Disappointment in the Cards?

Zacks

Viacom, Inc. VIAB is slated to release fourth-quarter fiscal 2017 results on Nov 16, before the market opens.

Last quarter, the company delivered a positive earnings surprise of 11.4%. It has an impressive earnings track record, beating estimates in each of the preceding four quarters with an average beat of 19.2%.


Let’s see, how things shape up for this announcement.

Factors Likely at Play

Viacom has been hurt by declining domestic advertising revenues for quite some time now and the fourth quarter is likely to be no different. The Zacks Consensus Estimate for fourth-quarter fiscal 2017 advertising revenues stands at $1,162 million, below $1,235 million reported in the previous quarter.

The company has also projected a bleak outlook for fourth-quarter fiscal 2017 domestic affiliate revenues. It expects the metric to decline in low-single digits in the period to be reported. The Zacks Consensus Estimate for the same is pegged at $1,148 million, below the year-ago reported figure of $1,160 million.

Viacom’s high-debt levels are also concerning and might hurt the overall results in the quarter. Additionally, the company’s performance is liable to be affected by adverse foreign currency movement as it operates globally.

Due to these headwinds, shares of the company have lost 17.7% in the last three months, underperforming the industry’s 2.8% decline.

However, the company’s initiatives to expand its portfolio are encouraging. In order to strengthen foothold in Europe, Viacom International Media Networks, a division of Viacom, acquired the Italian free-to-air channel, LCN 49, from Scripps Networks Interactive in September. The company also announced collaboration with Cisco Systems in the same month to develop an enhanced video distribution network foundation.

Earnings Whispers

Our proven model does not conclusively show that Viacom 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. But that is not the case here as elaborated below.

Zacks ESP: Viacom has an Earnings ESP of -4.84%. This is because the Most Accurate estimate stands at 81 cents per share, while the Zacks Consensus Estimate is pegged higher at 85 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Viacom Inc. Price and EPS Surprise

Viacom Inc. Price and EPS Surprise | Viacom Inc. Quote

Stocks to Consider

Investors interested in the broader Consumer Discretionary sector may consider the following stocks, possessing the right combination of elements to beat on earnings in their next releases.

Francesca’s Holdings Corporation FRAN has an Earnings ESP of +56.25% and a Zacks Rank #3. The company is anticipated to report third-quarter 2017 financial results on Dec 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Guess, Inc. GES has an Earnings ESP of +1.47% and a Zacks Rank of 3. The company will report third-quarter fiscal 2018 results on Nov 21.

Nike, Inc. NKE has an Earnings ESP of +2.56%. The Zacks #3 Ranked company is expected to report second-quarter fiscal 2018 results on Dec 19.

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