Yahoo Finance What Awaits Warner Bros. Discovery (WBD) in Q2 Earnings?
Warner Bros. Discovery WBD is set to report second-quarter 2023 results on Aug 3.
For the quarter, the Zacks Consensus Estimate for loss has narrowed by a penny to 38 cents per share in the past 30 days.
The consensus mark for revenues is pegged at $10.48 billion, implying a 6.65% increase from the year-ago quarter’s reported figure.
On Apr 8, 2022, Discovery and AT&T's Warner Media unit completed the previously announced merger to form a combined company, Warner Bros. Discovery.
Let’s see how things have shaped up for this announcement.
Warner Bros. Discovery, Inc. Price and EPS Surprise
Warner Bros. Discovery, Inc. price-eps-surprise | Warner Bros. Discovery, Inc. Quote
Factors to Consider
Warner Bros. Discovery’s second-quarter 2023 performance is expected to have witnessed a steady ad-spending environment. The company generates more than 50% of its revenues from advertising.
In the first quarter, Advertising revenues increased 55.7% year over year to $2.29 billion. This trend is likely to have continued in the to-be-reported quarter.
In the to-be-reported quarter, Warner Bros. Discovery U.S Ad Sales announced new partnerships with 605, ABCS Insights, DISQO, EDO, LoopMe and Pilotly to further demonstrate greater attribution and efficacy of advertising campaigns across its linear, digital and advanced audiences.
Moreover, the company launched WBD Stream, a new and unified digital video offering available to advertisers in the 2023-24 Upfront. The new destination for digital video offers advertisers seamless access to the most popular and premium content across Warner Bros. Discovery’s portfolio of sports, lifestyle, entertainment and news, including the websites and apps of top brands like Bleacher Report, Food Network, TNT, Animal Planet, ID and HGTV.
The advertising philosophy for Max, launched on May 23, is driven by a framework that allows brands to reach, reward and interact with consumers in unique and effective ways. Markedly, 63% of HBO Max users are under 40, attracting young audiences that are key for advertisers.
The company boasts a strong non-fiction content portfolio. The increasing availability of its content across linear and digital over-the-top platforms like Hulu and Sling TV is expected to have improved traffic in the to-be-reported quarter. Steady demand for unscripted content is likely to have contributed to Dplay’s performance.
In the second quarter, Warner Bros. Discovery introduced Max, its enhanced streaming service, which launched in the United States on May 23. This is expected to have aided subscriber growth in the to-be-reported quarter.
Max is the destination for HBO Originals, Warner Bros. films, Max Originals, the DC universe, the Wizarding World of Harry Potter, an expansive offering of kids content and best-in-class programming across food, home, reality, lifestyle and documentaries from leading brands like HGTV, Food Network, Discovery Channel, TLC and ID.
Steady viewership of multiple channels, including Discovery Channel, Animal Planet, Food Network, HGTV, MotorTrend, Science, TLC, ID, Oprah, Eurosport, the Cooking Channel and UKTV Lifestyle, are expected to have aided top-line growth in the to-be-reported quarter.
WBD ended first-quarter 2023 with 97.6 million global Direct-to-Consumer (DTC) subscribers compared with 96.1 million subscribers in the previous quarter. For the second quarter, the Zacks Consensus Estimate for total DTC subscribers is currently pegged at 98.7 million.
Discovery+ is off to an impressive start. Discovery+ became a sister service to AT&T's WarnerMedia's HBO Max in April 2022, following the merger with Discovery into Warner Bros.
The availability of Discovery+ on LG Smart TVs in Canada, including LG’s line-up of award-winning LG OLED TVs and LG QNED MiniLED TVs, is expected to have aided the top line in the to-be-reported quarter.
However, the upcoming recessionary fears could draw back users to cut down spending on their recreational activities. The massive content slashing by HBO Max to cut down on its costs is expected to have reflected upon user engagement in the to-be-reported quarter.
WBD has been finding itself in a thick soup lately. Along with losses that it is facing on its high-budget movies, the company has been in high debt ever since the merger of Warner Media and Discovery. This is expected to have weighed on margins in the to-be-reported quarter.
What Our Model Says
Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Warner Bros. Discovery has an Earnings ESP of -1.31% and currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are few stocks worth considering, as our model shows that these have the right combination of elements to beat on earnings this season.
Itron ITRI has an Earnings ESP of +7.31% and sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Itron is scheduled to release second-quarter 2023 results on Aug 3. The Zacks Consensus Estimate for ITRI’s earnings is pegged at 31 cents per share, suggesting a jump from the prior-year quarter’s reported figure of 7 cents.
CACI International CACI has an Earnings ESP of +2.36% and a Zacks Rank #2 at present.
CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9. The Zacks Consensus Estimate for CACI’s earnings is pegged at $4.85 per share, suggesting growth of 6.8% from the prior-year quarter’s reported figure.
Docebo DCBO has an Earnings ESP of +6.67% and a Zacks Rank #3 at present.
Docebo is set to report its second-quarter fiscal 2023 results on Aug 10. The Zacks Consensus Estimate for DCBO’s earnings is pegged at 8 cents per share. The company reported a loss of 5 cents per share in the year-ago quarter.
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