With the current reporting cycle drawing to an end, overall earnings growth remains elusive. As more companies report their quarterly numbers, the predictions of this quarter being the fifth straight quarter of an earnings decline seems more pertinent. As per the recent Earnings Outlook, 454 out of the total S&P 500 companies’ earnings have declined by 3.7% on 0.7% lower revenues (as of Aug 10). Also, we expect earnings for the quarter to be down 3.4% from the same period last year on 0.4% lower revenues.
Additionally, third-quarter estimates are on a downward spiral too, indicative of the fact that the earnings recession will prevail through this quarter. However, we expect the effects of this downturn to subside in the fourth quarter and meaningful earnings growth to resume thereon.
While our data points to the fact that the ongoing earnings recession is here to prevail, we focus on some media companies that are expected to report their quarterly results in the next week.
MSG Networks Inc. MSGN is engaged in the production and content development which comprises sports and entertainment networks. This Zacks Rank #2 (Buy) company is scheduled to report its fourth-quarter fiscal 2016 results and has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 49 cents. According to our proven model, a company needs the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #3 or better – to increase the odds of an earnings surprise. Thus, MSG Networks doesn’t conclusively show that it is likely to beat the Zacks Consensus Estimate this quarter.
Eros International PlcEROS co-produces, acquires and distributes film content made in languages of India across multiple formats globally. The company is slated to release its first-quarter fiscal 2017 results, and has a combination of Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%.This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 14 cents. Although a Zacks Rank #3 increases the predictive power of ESP, we need a positive Earnings ESP to be confident of an earnings beat and hence Eros doesn’t conclusively show that it is likely to beat the Zacks Consensus Estimate this quarter.
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