Discovery, Inc. (DISCA - Free Report) 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.
Two other companies with a Zacks Rank #1 (Strong Buy) in its industry are Roku,Inc. (ROKU - Free Report) and iHeartMedia, Inc. (IHRT - Free Report) .
Discovery will report third quarter results on Nov 7.
For investors looking for a way to get into content, Discovery is one to keep on your short list.
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