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What's in Store for AMC Networks (AMCX) in Q3 Earnings?

Zacks Equity Research
Updated

AMC Networks Inc AMCX is slated to report third-quarter 2017 financial numbers on Nov 2, before the opening bell.

Last quarter, AMC Networks delivered a positive earnings surprise of 33.33%. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 9.66%.

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

Factors at Play

AMC Networks owns and operates various cable television stations and is engaged in the production of programming and movie content. The company’s programming network channels include AMC, IFC, Sundance, WE and BBC America.

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AMC Networks’ strength lies in programs with original content for which it holds ownership rights. Shows like Breaking Bad and Mad Men have been major hits, driving commercial success for the company. However, one of the biggest drags for the company is that its network is entirely dependent on the The Walking Dead franchise.

The eighth season of The Walking Dead series was ranked as the number one television show, with 15 million total viewers and 9.3 million 25-54 adults. AMC Networks is also boosting its regional growth in key markets with channel launches and new distribution deals with key pay-TV operators in Latin America, Central and Eastern Europe, Iberia and Africa to serve audiences with programs from multiple genres.

Additionally, serious competitive threat from over-the-top (OTT) online video streaming service providers and other media companies may mar the quarter’s performance. The recent trend of the bulk of ad revenues skewed toward Internet TV is a concern as well. AMC Networks competes in the highly-competitive broadcast radio and television industry. Its major competitors include CBS Corp CBS, Gray Television Inc and Entercom Communications Corp ETM, to name a few.

Over the past three months, shares of AMC Networks have lost 17.8% compared with the industry’s decline of 5.4%.

 

 

Earnings Whispers

Our proven model does not conclusively show that AMC Networks is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case here as elaborated below.

Zacks ESP: AMC Networks has an Earnings ESP of -2.25%. This is because the Most Accurate estimate stands at $1.14, while the Zacks Consensus Estimate is pegged at $1.17. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

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

 

AMC Networks Inc. Price and EPS Surprise

 

AMC Networks Inc. Price and EPS Surprise | AMC Networks Inc. Quote

 

Key Pick

Here is a company from the broader Consumer Discretionary sector — which houses AMC Networks — that has the right combination of elements to post an earnings beat this quarter.

Netflix Inc NFLX is expected to release fourth-quarter 2017 results on Jan 1, 2018. The company has an Earnings ESP of +1.58% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings beat the Zacks Consensus Estimate in two of the previous four quarters, with an average positive surprise of 1.25%.

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CBS Corporation (CBS) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Entercom Communications Corporation (ETM) : Free Stock Analysis Report
 
AMC Networks Inc. (AMCX) : Free Stock Analysis Report
 
Gray Television, Inc. (GTN) : Free Stock Analysis Report
 
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