Benzinga – Benzinga Contributor, Zacks.
warner bros discovery (NASDAQ: WBD) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
Shares of the operator of cable TV channels such as TLC and Animal Planet have lost -3% over the past month compared to -3% for the Zacks S&P 500 Composite Index. The Zacks Broadcast Radio and Television industry, which includes Warner Bros. Discovery, has declined 9.3% in this period. The key question here is where the stock is likely to go in the short term.
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
remove ads
.
Warner Bros. Discovery is expected to post a loss of $0.23 per share for the current quarter, which would represent a loss of -227.8% from the year-ago period. The Zacks Consensus Estimate remained unchanged over the past 30 days.
Consensus earnings estimate for the current fiscal year of -$0.35 represents a year-over-year change of +72.7%. This estimate has changed -2.1% over the past 30 days.
Next year's consensus earnings estimate of $0.06 represents a +117.8% change from the earnings that Warner Bros. Discovery was expected to report a year ago. Estimates have remained unchanged over the past month.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, leverages the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent consensus estimate change, along with three of his other factors related to the earnings estimate, give Warner Bros. Discovery a Zacks Rank of #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Expected revenue growth rate
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For Warner Bros. Discovery, the consensus revenue estimate for the current quarter is $10.22 billion, representing a -4.5% change from the year-ago period. The current and next fiscal year estimates of $41.43 billion and $42.8 billion represent changes of +0.3% and +3.3%, respectively.
remove ads
.
Last reported results and surprising details
Warner Bros. Discovery reported revenue of $10.28 billion in its last reported quarter. This represents a -6.6% year-over-year change. EPS for the same period was -$0.16, compared to $0.42 a year ago.
The reported revenue represents a surprise of +0.58% when compared to the Zacks Consensus Estimate of $10.23 billion. EPS surprise was -45.45%.
The company has failed to beat consensus EPS estimates in any of the last four quarters. The company has surpassed consensus revenue estimates three times during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
The present value of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), and the past value of your company Comparing a company to its peers based on these parameters will help you see how reasonable its stock price is. You can get a good idea of ​​what
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
Warner Bros. Discovery is rated A on this score, meaning it trades at a discount to its peers.
remove ads
.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding Warner Bros. Discovery is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
Click here to read this article on Zacks.com.
Read the original article on Benzinga