Why Time Warner (TWX) Stock Is Down Today

NEW YORK (TheStreet) -- Time Warner (TWX) was falling -0.4% to $68.84 Wednesday on reports that Amazon.com (AMZN) is not taking pre-orders for any Warner Bros. movies and criticism over the studio's strategy.

According to The New York Times, Amazon is no longer accepting pre-orders for the DVD and Blu-ray versions of The LEGO Movie and other Warner Bros. movies due to a dispute with the company. Unlike the recent dispute with Hachette, Amazon is not delaying shipments of DVDs and Blu-rays once the movies are available.

Separately, Warner Bros. is facing criticism for its strategy to focus on big box office hits over profitable movies in the $100 million to $200 million range. According to The Hollywood Reporter, the studio may have to wait until Batman v Superman: Dawn of Justice in 2016 to reach to top of the box office again.

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TheStreet Ratings team rates TIME WARNER INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate TIME WARNER INC (TWX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • TIME WARNER INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TIME WARNER INC increased its bottom line by earning $3.77 versus $3.00 in the prior year. This year, the market expects an improvement in earnings ($4.00 versus $3.77).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 71.3% when compared to the same quarter one year prior, rising from $754.00 million to $1,292.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.9%. Since the same quarter one year prior, revenues slightly increased by 8.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
  • You can view the full analysis from the report here: TWX Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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