Why Did Time Warner Stock Fall after Earnings Release?


Dec. 4 2020, Updated 10:52 a.m. ET

Time Warner in fiscal 4Q15

On February 10, 2016, Time Warner (TWX) reported its 4Q15 and fiscal 2015 earnings. The company reported revenues of $7.1 billion in 4Q15, a decline of 6% year-over-year. Time Warner’s revenues in fiscal 4Q15 fell short of consensus Wall Street analysts’ estimates of $7.5 billion. The company posted revenues of $28.1 billion in fiscal 2015, a rise of 3% over fiscal 2014, which again fell short of consensus Wall Street analysts’ estimates of $28.6 billion.

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Time Warner had an adjusted diluted EPS (earnings per share) of $4.75 in fiscal 2015, up by 14% from fiscal 2014. The adjusted diluted EPS in fiscal 2015 exceeded consensus Wall Street analysts’ expectations of $4.69 per share. The company expects its adjusted EPS to be in the range of $5.30 to $5.40 per share in fiscal 2016.

The company had an adjusted EPS of $1.06 in fiscal 4Q15, a rise of 8% over 4Q14. The adjusted EPS slightly exceeded Wall Street analysts’ EPS estimates of $1.01 per share.

However, the company’s share price fell by 5% on February 10, when the earnings were announced. Time Warner’s stock price has declined by 7.2% year-to-date. Viacom (VIAB) is another company whose stock took a beating after the announcement of its fiscal 1Q16 results.

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Reason for the thumbs down

The reason for the market’s thumbs down for Time Warner stock was the decline in the company’s adjusted operating income across all segments in fiscal 4Q15. The company’s adjusted operating income was $1.4 billion in 4Q15, a decrease of 12% over fiscal 4Q14.

The Walt Disney Company’s (DIS) stellar fiscal 1Q16 results also failed to address the fall in Disney’s stock price. The stock fell 2.8% in after-hours trading on February 9, as Disney’s ESPN remained a cause of worry for investors.

In this series, we’ll look at key highlights of each of Time Warner’s business segments and the company’s dividend policy.

Time Warner makes up 0.29% of the iShares Core S&P 500 (IVV). For an investor interested in exposure to computers, IVV has 3.9% exposure to the sector. IVV holds 3.3% of Apple (AAPL).


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