U.S. equities continue to drift higher on Friday as the third-quarter earnings season rolls on. The focus has been on the big bank stocks, which are suffering from some selling pressure amid a crush on their trading revenues from the low volatility trading environment.
Also adding to the disappointment has been a hit on TV stocks as results confirm the accelerating pace of “cord cutting” by consumers tired of expensive, bundled television and entertainment packages. Instead, they prefer cheaper, more customized “over-the-top” offerings from the likes of Netflix, Inc. (NASDAQ:NFLX).
All of this comes in the context of a week of more bad news for Hollywood regarding harassment scandal and generally underwhelming box office performances lately. All of these issues have placed media companies under fire.
With that in mind, here are five entertainment stocks to watch as they feel the heat:
TV Stocks to Watch: AT&T (T)
AT&T Inc. (NYSE:T) is among the media stocks to watch as T shares have been hammered this week, falling back to their July/September lows. More recently, AT&T is down roughly 8% from the highs seen earlier this week after the company provided a Q3 update that was marred by a 90,000 net subscriber loss in its DirecTV unit.
Some of this was driven by the hurricane aftermath in the south (blown away satellites dishes, etc.). But management also admitted increased competition and the squeeze from over-the-top services was to blame as well.
The company will next report results on Oct. 24 after the close. Analysts are looking for earnings of 75-cents-per-share on revenues of $40.3 billion. When T last reported on July 25, earnings of 79-cents-per-share beat estimates by 5 cents on a 1.6% decline in revenue.
TV Stocks to Watch: Comcast (CMCSA)
Comcast Corporation (NASDAQ:CMCSA) is another key company among the entertainment stocks to watch, as shares are tumbling back to lows not seen since January. Specifically, CMCSA is down roughly 12% from the double-top highs set in June and August. The same headwinds described above are hitting Comcast as well, which is trying to fight back with a $18-a-month streaming service according to ReCode. The pullback is the first major selloff for the stock in a year.
CMCSA will next report results on Oct. 26 before the bell. Analysts are looking for earnings of 49-cents-per-share on revenues of $21.1 billion. When the company last reported on July 27, earnings of 52-cents-per-share beat estimates by 3 cents on a 9.8% rise in revenues.
TV Stocks to Watch: Disney (DIS)
Once a powerful momentum favorite and a standout among other media stocks, Walt Disney Co (NYSE:DIS) shares have been in the doghouse for months amid persistent decline. DIS shares are down roughly 16% from their late April high, returning to levels seen last November and perpetuating a long, multi-year trading range going back to the summer of 2015. Although it has long been among the entertainment stocks to watch, DIS was recently downgraded by analysts at Guggenheim amid ongoing pressure on its ESPN unit.
The company will next report on Nov. 9 after the close. Analysts are looking for earnings of $1.17-per-share on revenues of $13.5 billion. When the company last reported on Aug. 8, earnings of $1.58-per-share beat estimates by 3 cents, despite a 0.3% decline in revenues.
TV Stocks to Watch: CBS Corporation (CBS)
CBS Corporation (NYSE:CBS) shares are down more than 17% from their April high, testing their 200-week moving average for the first time since September 2016. Not only is cord cutting a problem for media stocks like CBS, which is trying to fight back with its CBS All Access service, but President Trump has been railing on news organizations for perceived bias, threatening to review their broadcast licenses.
The company will next report results on Nov. 2 after the close. Analysts are looking for earnings of $1.12-per-share on revenues of $3.3 billion. When the company last reported on Aug. 7, earnings of $1.04-per-share beat estimates by 7 cents on a 9.4% rise in revenues.
TV Stocks to Watch: AMC Networks (AMCX)
AMC Networks Inc (NASDAQ:AMCX) shares are down more than 20% from their late July highs, falling back to test the May-July lows. While the company has set itself apart from other tv stocks with the success of its programming slate — The Walking Dead is a runaway hit — the company’s premier series is getting long in the tooth, so to speak, and no replacement is on the horizon. Management noted at a recent Goldman Sachs conference that it’s spending upwards of a $1 billion a year on content already.
AMCX will next report results on Nov. 2 before the open. Analysts are looking for earnings of $1.20-per-share on revenues of $661.8 million. When the company last reported on Aug. 3, earnings of $1.88-per-share beat estimates by 46 cents on a 3.8% rise in revenues.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
