Will NY Times (NYT) Miss Q2 Earnings on Soft Advertising?

The New York Times Company NYT, a diversified media conglomerate, is slated to report its second-quarter 2014 results on Jul 29. In the last quarter, it delivered a positive surprise of 75%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

The New York Times Company has been adding diverse revenue streams, which include a pay-and-read model for NYTimes.com and the International New York Times, to make it less susceptible to economic downturns. Nonetheless, advertising remains a significant source of revenue for the company, which in turn depends upon the health of the economy. The company had earlier hinted that total advertising revenue for the second quarter would decline in the mid-single-digit range due to challenging year-over-year comparisons.

Earnings Whispers?

Our proven model does not conclusively show that The New York Times Company is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for The New York Times Company is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 8 cents.

Zacks Rank: The New York Times Company has a Zacks Rank #4 (Sell) which lowers the predictive power of ESP. We caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

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

Big Lots Inc. BIG has an Earnings ESP of +3.33% and a Zacks Rank #2 (Buy).

Time Warner Inc. TWX has an Earnings ESP of +1.19% and a Zacks Rank #3 (Hold).

The Walt Disney Company DIS has an Earnings ESP of +0.86% and a Zacks Rank #3.