For Immediate Release
Chicago, IL – October 17, 2019 – Zacks Equity Research Shares of Discovery, Inc. (NASDAQ:DISCA) as the Bull of the Day, The Mosaic Company (NYSE:MOS) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Netflix (NASDAQ:NFLX) and IBM Corp. (NYSE:IBM) .
Here is a synopsis of all four stocks:
Discovery, Inc. has figured out how to make captivating original content. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by 72% in 2019.
Discovery delivers over 8,000 hours of original programming each year in 220 countries and nearly 50 languages. It operates popular cable channels such as Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, Motor Trend, Animal Planet, Science Channel and, in the US, OWN: Oprah Winfrey Network.
In Latin America it also operates Discovery Kids, while in Europe, it operates Eurosport and is the home of the Olympic Games and premium sports.
Another Solid Quarter in Q2
On Aug 6, Discovery reported its second quarter results and missed on the Zacks Consensus but only by a penny. Earnings were $0.98 versus the consensus of $0.99.
Revenue rose 1% to $2.885 billion compared to a year ago, as the US Network saw a 5% increase while the International Network saw a 3% decrease.
Excluding foreign currency fluctuations, total revenue actually gained 4% with International rising 3%.
Some highlights from the quarter included being the No. 1 most watched TV portfolio for women aged 25-54 in the United States in June.
It also launched 9 additional networks on YouTube TV in the US and signed a multi-year live and on demand carriage agreement with fuboTV.
Full Year Estimates Moving Higher for 2019
The analysts have been bullish about Discovery in the last month.
One analyst raised their 2019 estimate during that time, pushing the Zacks Consensus up to $3.62 from $3.61.
That's earnings growth of 72% as the company made $2.11 in 2018.
They're also bullish on 2020 as they see another year of double digit earnings growth with the Zacks Consensus at $4.06, or a gain of 12.2%.
Shares are Cheap
Over the last 52-weeks shares are down 15.9% compared with the S&P 500 being up 6.4% during that time.
They have a forward P/E of just 7.7 and with the earnings growth and low P/E that gives them a PEG of just 0.4.
There's no dividend but in April 2019 the board did authorize common stock repurchases up to $1 billion.
Discovery will report third quarter results on Nov 7.
The Mosaic Company is grappling with the extreme weather conditions that hit US farmers in the spring. This Zacks Rank #5 (Strong Sell) continues to see cuts to its 2019 and 2020 earnings estimates.
Mosaic makes concentrated phosphate and potash crop nutrients. It is a single source provider of phosphate and potash fertilizers and feed ingredients for the global agriculture industry.
A Miss in the Second Quarter
On Aug 6, Mosaic reported its second quarter results and missed on the Zacks Consensus Estimate by $0.18. Earnings were $0.12 versus the Zacks Consensus of $0.30.
“We’ve experienced a North American spring season that was wetter and later than any in recorded history,” said Mosaic President and CEO Joc O’Rourke.
“While our Potash and Mosaic Fertilizantes businesses continued to perform well, weakness in the phosphates market negatively impacted second quarter results."
"Moving forward, strong price increases in grains together with depleted soil nutrients in North America are expected to drive fertilizer applications significantly higher this fall," he added.
It closed its Plant City phosphates facility and accelerated the development of the K3 potash mine. Additionally it curtailed potash production at Colonsay.
Yet it still expects strong market fundamentals in the second half of 2019 and beyond.
Analysts Keep Cutting Full Year Estimates
But with the tariffs and trade war issues lingering with China, which is putting pressure on American farmers, the analysts have gotten pessimistic.
In just the last week, one analyst cut both 2019 and 2020 earnings estimates.
The 2019 Zacks Consensus Estimate has now fallen to $1.12 from $1.65 just 90 days ago.
Mosaic made $2.12 in 2018 so that's an earnings decline of 47.2%.
2020 is also going the wrong direction. The Zacks Consensus Estimate has fallen to $1.77 from $2.36 during the previous 3 months.
Are Shares Cheap?
Shares have taken a beating for most of the year and are now down 31% year-to-date.
But they're not that cheap either as those estimates are cut. They trade with a forward P/E of 18.
Patient investors do get a dividend currently yielding 1%, however.
Mosaic is expected to report third quarter earnings on Nov 4, 2019.
Netflix (NFLX) Beats, Up 10%; IBM Mixed, Down 3%
Netflix has outperformed earnings expectations for Q3 after the bell today, posting $1.47 per share versus $1.05 in the Zacks consensus (which was itself +18% year over year). Revenues came in a smidge light at $5.244 billion, in-line basically but officially down from the $5.25 billion anticipated. Shares are up big — over 7% — in immediate after-market trading.
Subscriber adds were disappointing on the U.S. side — 517K new streaming subscribers in the quarter missed the 0.8 million estimate — though at least this was a positive number, as opposed to the previous quarter which showed negative subscriber adds. Guidance for subscribers in Q4, when we expect Disney+ and Apple (NASDAQ:AAPL) TV+ to come on market as well, also disappointed: 7.6 million streaming net adds are expected, down from the estimated 9.5 million.
International net adds made up the difference: 6.255 million outperformed the 6.05 million analysts were anticipating. This shows Netflix’s long-term goals of expanding its market globally is bearing fruit, even if domestic challenges look to provide headwinds going forward.
IBM Corp. posted mixed results in its Q3 report this afternoon, beating on the bottom line — $2.68 per share versus $2.64 expected — but missing on the top: $18.08 billion, down from the Zacks consensus $18.24 billion. This is the fifth straight quarter of shrinking sales revenue for the tech giant, as it continues to re-focus its platforms. A 2% gain in cloud revenue is decent, but not good enough to keep the stock from selling off 2.7% in the after-market.
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