If you want a predictable business, selling soap beats showbiz every day. That’s real soap, not soap operas.
The Value Line Investment Survey publishes an “earnings predictability” score for most of the 1,700 stocks it covers. Soap maker Procter & Gamble has a score of 100, the highest possible.
Still, some entertainment industry stocks also score high on the spectrum (some of them, natch, with P&G as a sponsor).
Top score for a biz stock is shared by Disney and Time Warner Cable, which each receive an 85 for earnings predictability. But while the cable MSO’s steady subscriber revenues tend to make its earnings predictable, the Mouse House has taken a roller-coaster ride this year, with a massive flop in “John Carter,” but boffo returns from “The Avengers.”
How can that be predictable? In fact, only about 16% of Disney’s revenues come from its studio; 46% of sales come from media networks, including sports powerhouse ESPN and 29% from the parks and resorts unit, which includes cruise lines.
At the other end of the earnings predictability range are Lionsgate Entertainment with a score of 20 and Liberty Global, a provider of broadband communications and satellite-TV in 15 countries, with a score of 10.
Lionsgate’s earnings may become more predictable with the addition of Summit’s “Twilight” franchise and grosses from the “Hunger Games” franchise. As for Liberty Global, the company’s far-flung international ops make it susceptible to the vagaries of foreign exchange fluctuations.