Time Warner Inc. is set to report earnings for the second quarter before the market opens on Wednesday.
Here’s what investors can expect:
Earnings: Time Warner TWX, +0.12% is expected to report earnings of $1.16 per share for the second quarter, according to analysts tracked by FactSet. That would mark a more than 7% drop compared with its $1.25 per-share earnings during the same period a year ago. During the first quarter, Time Warner beat FactSet’s $1.29 per-share consensus and reported earnings of $1.49. The media and entertainment company has beat the FactSet consensus on earnings in every quarter dating back to the 2008 fourth quarter.
Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, expects Time Warner earnings to come in a bit higher at $1.18 per share.
Revenue: Analysts surveyed by FactSet are looking for Time Warner to post revenue of $7.05 billion, which would be down 4% compared with the same quarter last year, when the company reported revenue of $7.35 billion. During the most-recent first quarter Time Warner reported $7.31 billion in revenue.
The revenue forecast breaks down to about $2.99 billion from its Turner Broadcasting business, $1.44 billion from cable network HBO and $2.85 billion from its Warner Bros. film division.
Estimize expects revenue to hit $7.23 billion.
Share price: Time Warner shares are up more than 18% in the year to date, but are down 13% over the last 12 months. In the year to date, Time Warner is outperforming the S&P 500 Index SPX, -0.13% , which is up 6%. Analysts following the stock on FactSet have an average $85.63 12-month price target on Time Warner, which represents about a 12% premium to Friday’s close.
Other issues: At the forefront of this quarter’s results for Time Warner are its advertising revenue around its news broadcasting business and its licensing deal with the NBA. Thanks to the NBA playoffs, Wedbush analyst James Dix wrote in a note to clients he expects advertising revenue at Time Warner’s TNT network to be up about 15% year-over-year.
However, the analyst expects TV licensing revenue to be down in the quarter.
Pacific Crest analyst Andy Hargreaves wrote that Time Warner’s entertainment viewership is a major problem for the company.
“We believe Time Warner is fully valued,” Hargreaves wrote. “Strong ratings performances by news and sports continues to mask deteriorating general entertainment viewership. Time Warner trades at the second-highest multiple among media peers, which we believe prices in likely growth at HBO and Warner Bros.”
That being said, Hargreaves too believes Time Warner’s news and NBA deal should help offset poor second-quarter ratings elsewhere.