AMC Networks, the owner of cable channels like AMC and IFC, is facing projections of a 31.7% decrease in quarterly earnings per share and a 15.8% drop in revenues for the quarter ending March 2024. Analysts have adjusted their consensus EPS estimate downward by 2.66% over the last month, reflecting a reassessment of initial predictions by covering analysts. This data gives rise to questions about the company's future earnings prospects and the potential impact on stock performance.
The concept of Earnings ESP (Expected Surprise Prediction) is highlighted as a tool for investors to gauge potential deviations in actual earnings from consensus estimates. A positive Earnings ESP, in combination with a strong Zacks Rank of #1, 2, or 3, is seen as a predictor of an earnings beat, although the model's reliability is mainly significant for positive ESP readings. On the other hand, a negative Earnings ESP is not necessarily indicative of an earnings miss, according to research findings.
For AMC Networks specifically, the current situation indicates a positive Earnings ESP of +14.29%, with analysts showing optimism about the company's earnings outlook. Despite a Zacks Rank of #3, this combination suggests that AMC Networks is likely to outperform the consensus EPS estimate. Past surprise history is also deemed crucial in analyzing a company's potential influence on upcoming earnings, as demonstrated by AMC Networks' track record of beating consensus estimates in the previous four quarters.