Viacom (VIAB) To Report Q3 Earnings: What's In The Cards?

Viacom (NASDAQ:VIAB) is slated to report third-quarter fiscal 2019 results on Aug 8.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average positive surprise being 10.8%.

In the last reported quarter, adjusted earnings of 95 cents per share beat the Zacks Consensus Estimate by 13 cents. The figure increased 3% year over year on a constant-currency (cc) basis.

However, revenues of $2.96 billion lagged the Zacks Consensus Estimate of $3.03 billion. The figure also decreased 4% year over year at cc.

The Zacks Consensus Estimate for third-quarter earnings has increased by a penny to $1.06 over the past 30 days, indicating a decline of 10.2% from the year-ago quarter's reported figure.

The consensus mark for sales is pegged at $3.38 billion, suggesting growth of 4.4% from the figure reported in the year-ago quarter.

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

Factors to Watch

The turnaround of Paramount is benefiting Viacom. Pet Sematary and Rocketman were two movies released by the division during the to-be-reported quarter. Despite facing significant competition from Avengers: Endgame and Spiderman Far From Home, both movies generated profits.

Per Box Office Mojo data, Pet Sematary’s total gross collection was $54.7 million compared with a production budget of $21 million. Although Rocketman failed to impress, the movie collected $95.6 million (as of Aug 4) compared with a production budget of $40 million.

These are expected to have driven Viacom’s top line and operating income in the fiscal third quarter.

Moreover, increasing investments in original content and focus on providing quality entertainment are driving audience for Viacom’s flagship brands like MTV, BET and Comedy Central.

MTV’s resurgence is noteworthy. The brand’s strong adoption among the 18-34 demography surely bodes well for Viacom’s top-line growth.

Notably, 2019 MTV Movie & TV Awards simulcast was the #1 cable premiere and TV’s most social show in the to-be-reported quarter, per Viacom, which cited data from Nielsen, Facebook (NASDAQ:FB) Insights, Instagram Insights, Twitter Analytics and YouTube Analytics.

Moreover, MTV announced that Sheila Nevins, former president of HBO’s Documentary films, will join the platform to launch MTV Documentary Films.

Additionally, Nickelodeon unveiled certain shows that might have had a positive impact on viewer engagement in the to-be-reported quarter.

During the fiscal third quarter, Nickelodeon and CBS Television Studios approved a new animated Star Trek series. Nickelodeon also has renewed some of the biggest hits — PAW Patrol, Bubble Guppies, Abby Hatcher and Butterbean’s Café — in preschool TV.

Later in the quarter, BET Networks and Tyler Perry Studios unveiled a joint venture to launch BET+, a premier subscription video-on-demand service targeting the African American audience. This is expected to expand Viacom’s presence in this audience group.

Moreover, Pluto TV, which offers more than 100 live linear channels and more than 5,000 hours of on-demand content, including movies, news, sports, general entertainment and digital series, is expected to be a key catalyst.

Pluto TV’s availability on Comcast’s (NASDAQ:CMCSA) Xfinity X1 might have had a positive impact on the company’s top line in third-quarter fiscal 2019.

Further, domestic ad sales are anticipated to grow, after almost five years, driven by strength in Advanced Marketing Solutions (AMS), which includes Pluto TV.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Viacom has a Zacks Rank #3 and an Earnings ESP of +2.08%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Other Stocks With Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

Callaway Golf (NYSE:ELY) has an Earnings ESP of +6.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMC Entertainment (NYSE:AMC) has an Earnings ESP of +15.29% and a Zacks Rank #3.

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