Fox Corporation (FOXA), the owner of President Trump’s go-to conservative news channel Fox News, reported fiscal first quarter (Q1) adjusted earnings of 83 cents per share, trumping analysts’ expectations of 70 cents per share to record year-over-year (YOY) growth of 1.2%. The company also impressed on the revenue front, with its top-line figure surpassing Street projections by 3.8% and improving 5% compared to the same period last year.
The $21.43 billion TV broadcaster, which became a sole public company in March following the merger of The Walt Disney Company (DIS) and Twenty-First Century Fox, Inc, saw revenue in its other segment jump 64.5% YOY, reflecting higher sales associated with the operations of the Fox Studios Lot for third parties. Meanwhile, revenue from its television division, which represents over half of the company’s top line, rose 6.2% from the September 2018 quarter.
Although revenues from advertising fell 2.1% during the period, solid Fox programming ratings – notably from NFL games and primetime shows, coupled with a plethora of upcoming presidential election commercials – should help boost this metric moving into 2020.
After the encouraging quarterly results, Fox Corporation stock surged over 5%, giving it a trailing-three-month return of 14.18%. However, over the past three months, the stock has fallen 5.05% as of Nov. 8, 2019. Shareholders receive a 1.43% dividend yield.
Technical Outlook for Fox
Fox Corporation shares have traded within a descending channel since the newly incorporated company started trading on March 19. The media firm’s positive earnings provided a catalyst for a convincing breakout above the pattern’s upper trendline. Yesterday’s thrust above this closely watched resistance level may lead to a test of the stock’s debut trading day high at $40.95. Those who want to position for further price appreciation should place a stop-loss order underneath yesterday’s low at $33.37 to guard against a sudden loss of momentum.
Traders should also take a look at CBS Corporation (CBS) and Viacom Inc. (VIAB) – two other leading TV broadcasters that moved higher in the wake of Fox’s better-than-expected results. Below, we discuss their quarterly earnings and view several trading possibilities.
CBS Corporation (CBS)
Media conglomerate CBS operates through four business segments: entertainment, cable networks, publishing, and local media. The New York-based company’s television assets include the CBS television network, 30 local TV stations, and 50% of CW, a joint venture between CBS and Time Warner. Wall Street expects the broadcaster to disclose Q3 earnings of $1 per share, representing a bottom-line decline of 19.4%, when it releases its financial results ahead of the market open on Tuesday, Nov. 12. Analysts forecast revenue to come in at $3.38 billion, up 3.7% from the September 2018 quarter. As of Nov. 8, 2019, CBS stock has a market capitalization of $14.11 billion, pays a 2% dividend yield, and is trading down 12.31% year to date (YTD).
The TV broadcaster’s share price oscillated within an orderly trading range between January and July but has subsequently declined sharply in recent months. As the price has moved lower, a falling wedge has formed on the chart. The pattern, which appears like a cone that slopes down as the reaction highs and reaction lows converge, typically predicts a bullish reversal. Price has indeed started to show signs of turning around this week, with the stock staging a breakout above the pattern’s top trendline. Those who buy here should aim to book profits between $44 and $46.50, where price encounters a zone of resistance from two crucial horizontal lines and the falling 200-day simple moving average (SMA). Protect capital with a stop order placed beneath this month’s low at $36.07.
Viacom Inc. (VIAB)
Viacom operates media brands that create entertainment content globally. The company, which spun out of CBS in 2005, owns popular cable network channels including Nickelodeon, MTV, BET, and Comedy Central. Viacom has amassed a film library of roughly 2,500 films through Paramount Pictures under its filmed entertainment division. Analysts anticipate the $9.14 billion media giant to post a fiscal Q4 2019 profit of 76 cents per share on revenues of $3.42 billion, representing respective bottom- and top-line growth of -23.2% and -1.9% compared to the year-ago quarter. However, traders should watch for an earnings surprise, given the firm has topped estimates for the past seven consecutive quarters. Viacom stock offers a healthy 3.71% yield but has disappointed performance-wise, slumping almost 10% so far this year as of Nov. 8, 2019.
Viacom shares tracked 34% lower between July and October, plunging the stock into bear market territory. Adding to the gloomy sentiment, the 50-day SMA fell below the 200-day SMA in early September to generate a “death cross.” The ominous indicator cross warns of further selling ahead. Don’t discount a move higher from these levels, however. Like on the CBS chart, Viacom’s share price recently broke above a falling wedge pattern, which could attract the attention of breakout traders. Furthermore, the relative strength index (RSI) shows a reading below 50, giving the stock ample room to test higher prices. Those who take a long position should think about scaling out at significant resistance levels – specifically at $25 and $27.40. Consider setting a stop order somewhere under $22 to limit losses.