Warner Bros. Discovery to Post Q1 Earnings: What's in the Cards?

Warner Bros. Discovery WBD is scheduled to report its first-quarter 2025 results on May 8.

The Zacks Consensus Estimate for WBD’s first-quarter 2025 revenues is currently pegged at $9.75 billion, indicating a 2.12% decrease from the year-ago quarter’s reported figure.

The consensus mark for loss is pinned at 14 cents per share, which has widened by a penny over the past 30 days. The figure suggests a 65% increase from the year-ago reported figure.

WBD surpassed the Zacks Consensus Estimate for earnings in only one of the trailing four quarters and missed thrice, with a negative average surprise of 664.09%.

Warner Bros. Discovery, Inc. Price and EPS Surprise

Warner Bros. Discovery, Inc. price-eps-surprise | Warner Bros. Discovery, Inc. Quote

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Let us see how things are shaping up for the upcoming announcement.

Factors to Consider for WBD

In the direct-to-consumer segment, WBD experienced Max turning a critical corner in both subscriber growth and profitability in 2024. Subscribers grew 20% year over year, contributing to substantial profits. The company added 6.5 million subscribers in the fourth quarter alone. This trend is likely to have continued in the first quarter of 2025. 

Toward the end of the first quarter, Max was launched in Australia. The company also drove higher penetration in existing markets with its lower-priced ad-supported tier. This is likely to have increased subscriber and revenue growth in the quarter, but ARPU is expected to have taken a hit.

In 2024, the company’s television studio reclaimed its position as the industry’s #1 supplier of live-action TV and is expected to have maintained this position in the first quarter. In the linear networks segment, the company reached multi-year renewal agreements with five out of the six largest TV providers domestically. These agreements are expected to have delivered affiliate rate increases in the quarter under review. 

Pay TV subscribers are expected to have continued declining in the quarter. There is also expected to be some pressure on linear viewership, with advertising in this segment deteriorating. WBD invested in adding new rights to its sports portfolio and entered into a renewed long-term agreement with the NBA, the overlapping costs of which are expected to have weighed on first-quarter adjusted EBIDTA.

WBD saw a weak ad sales result in the fourth quarter. The company expected political advertising to benefit from the elections on CNN, which did not come in, but this is expected to have improved in the first quarter of 2025, as the company has been seeing less upfront cancellations. Cost per mille is expected to have been up in the quarter under review. 

What Our Model Says for WBD

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, which is not exactly the case here.

WBD currently has an Earnings ESP of -14.29% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Stocks to Consider

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

MercadoLibre MELI currently has an Earnings ESP of +2.30% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

MELI shares have increased 32.1% in the year-to-date (YTD) period. It is slated to report its first-quarter 2025 results on May 7.

Autohome ATHM has an Earnings ESP of +4.79% and a Zacks Rank #3 at present.

ATHM shares have gained 3.6% YTD. IT is scheduled to report its first-quarter 2025 results on May 8.

Fox FOXA has an Earnings ESP of +3.78% and sports a Zacks Rank #1 at present.

FOXA shares have gained 1.4% YTD. Fox is scheduled to report its third-quarter fiscal 2025 results on May 12.

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This article originally published on Zacks Investment Research (zacks.com).

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