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What Are the Factors Impacting Time Warner’s Stock Price?

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Time Warner’s year-to-date stock performance

On February 17, 2017, Time Warner (TWX) stock closed at $96.48. It has fallen a marginal 0.05% year-to-date (or YTD).

In contrast, The Walt Disney Company (DIS) has seen its YTD stock price rise 5.6%. Viacom (VIAB) and 21st Century Fox (FOXA) have seen their stock prices rise 25.3% and 8.2%, respectively, YTD.

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What could be benefiting Time Warner stock?

Earlier this month, Time Warner announced its 2016 results, reporting revenue of $29.3 billion for the year, a rise of 4% year-over-year (or YoY). The company posted adjusted operating income of $7.6 billion, a rise of 10% YoY. It had adjusted EPS (earnings per share) of $5.86 in 2016, a rise of 23% YoY.

The company declared EPS of $0.4 in 4Q16 and adjusted EPS of $1.25 in 4Q16. Its adjusted EPS of $1.25 exceeded Wall Street analysts’ consensus expectation of $1.19 per share.

In the middle of February, Time Warner’s shareholders also approved AT&T’s (T) proposed acquisition. Time Warner is seeing strong demand for its content, not only in the United States but also in international markets. As a result, it expects a rise in advertising and subscription revenues. At the end of 2016, Time Warner had a free cash flow of $4.7 billion.

In this series…

In this series, we’ll look at Time Warner’s outlook for its affiliate fees and advertising revenue. We’ll also look at the strategic importance of its digital platforms such as HBO Now and the outlook for its business segments such as Turner, Warner Bros., and HBO.

Time Warner makes up 0.37% of the SPDR S&P 500 ETF (SPY). SPY has 3.9% exposure to the computers sector.

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