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What Awaits Warner Bros. Discovery (WBD) in Q4 Earnings?

Warner Bros. Discovery WBD is set to report fourth-quarter 2023 results on Feb 23.

For the quarter, the Zacks Consensus Estimate for loss has widened by 2 cents to 11 cents per share in the past 30 days.

The consensus mark for revenues is pegged at $10.23 billion, implying a 7.11% decrease from the year-ago quarter’s reported figure.

Let’s see how things have shaped up for this announcement.

Warner Bros. Discovery, Inc. Price and EPS Surprise

Warner Bros. Discovery, Inc. Price and EPS Surprise
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 fourth-quarter 2023 performance is expected to have witnessed a sluggish ad-spending environment, primarily stemming from a decrease in audience engagement across its domestic general entertainment and news networks. This decline in viewership is likely to have negatively impacted WRD’s advertising revenues. The company generates more than 50% of its revenues from advertising.

Additionally, soft advertising markets in the United States are likely to have further compounded these challenges, making it difficult for Warner Bros. Discovery to maintain or grow its advertising revenues during the period.

In the third quarter, advertising revenues decreased 12% year over year to $1.79 billion. This trend is likely to have continued in the to-be-reported quarter.
The combination of high-budget movie losses and substantial debt following the merger of WarnerMedia and Discovery is likely to have exerted downward pressure on Warner Bros. Discovery's margins in the fourth quarter of 2023.

The massive content slashing by HBO Max to cut down on its costs is expected to have reflected in user engagement in the to-be-reported quarter.

WBD ended third-quarter 2023 with 95.1 million global Direct-to-Consumer (DTC) subscribers, which reflected a decline of 0.7 million global subscribers sequentially.

For the fourth quarter, the Zacks Consensus Estimate for total DTC subscribers is currently pegged at 95.263 million compared with 96.1 million reported in the year-ago quarter.

The company boasts a strong non-fiction content portfolio. The 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. The increasing popularity of content on Discovery+ holds promise.

Slow yet steady demand for unscripted content is likely to have contributed to Dplay’s performance.

Increasing subscriber growth in Max, the company’s enhanced streaming service, which launched in the United States on May 23, is expected to have aided top-line growth in the to-be-reported quarter.

In the to-be-reported quarter, Warner Bros. Discovery announced the launch of the ad-free tier of Max on YouTube Primetime Channels in the United States.

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 kid’s 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, is expected to have reflected upon top-line growth 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 -42.01% and carries a Zacks Rank #3 at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases.

The Gap GPS has an Earnings ESP of +24.44% and sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Gap is set to announce fourth-quarter 2023 results on Mar 7. The Zacks Consensus Estimate for GPS’ earnings is pinned at 19 cents per share. The company had incurred a loss of 75 cents per share in the year-ago quarter.

Eldorado Gold EGO has an Earnings ESP of +5.88% and a Zacks Rank #2 at present.

Eldorado Gold is set to announce fourth-quarter 2023 results on Feb 22. The Zacks Consensus Estimate for EGO’s earnings is pinned at 21 cents per share, indicating growth of 50% from the year-ago quarter’s figure.

Booking Holdings BKNG has an Earnings ESP of +2.07% and a Zacks Rank #3 at present.

Booking Holdings is scheduled to release fourth-quarter 2023 results on Feb 22. The Zacks Consensus Estimate for BKNG’s earnings is pegged at $29.69 per share, suggesting a jump of 20% from the prior-year quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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