Will Q3 Earnings Hold a Surprise for Meredith (MDP) Stock?

Meredith Corporation MDP, one of the leading media and marketing companies with interests in publishing, broadcasting, integrated marketing and interactive media, is slated to report third-quarter fiscal 2016 results on Apr 28. In the previous quarter, the company posted positive earnings surprise of 3.9%. Notably, the company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 3.1%. Let’s see how things are shaping up prior to this announcement.

Meredith Corporation (MDP) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

Factors This Quarter

With technological advancements, the demand of print media is steadily declining. As more and more readers shift toward paperless and online options, Meredith’s magazine portfolio is likely to come under enormous pressure. Though the company is expanding its digital presence, it will need time to undergo a complete metamorphosis. Paper and postage costs account for a substantial portion of the publishing segment's operating costs including cost to produce, distribute, and market printed products. A significant fluctuation in the prices of paper and postage may hurt the company’s bottom line.

Nevertheless, Meredith is focused on bolstering advertising revenues, primarily in the digital space, and is increasingly concentrating on brand licensing, marketing services and eCommerce.  Total revenue is anticipated to increase in the mid-single-digit range, while earnings per share are projected in the range of 77–82 cents for the third quarter.

Earnings Whispers

Our proven model does not conclusively project Meredith as likely to beat 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. This is not the case here, as you will see below.

Zacks ESP: ESP for Meredith is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 80 cents.

Zacks Rank: Meredith carries a Zacks Rank #4 (Sell).

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

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these to have the right combination of elements to post an earnings beat:  

Central Garden & Pet Company CENT has an Earnings ESP of +3.39% and a Zacks Rank #1

Thomson Reuters Corporation TRI has an Earnings ESP of +4.55% and a Zacks Rank #2.

Time Warner Inc. TWX has an Earnings ESP of +3.13% and a Zacks Rank #3.

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