CBS Corporation (
Many wondered what fate would become of traditional media
companies like CBS given the explosion of internet based content,
news and social media over the past decade. I think it's safe
to say that the masses did not expect these companies to thrive,
let alone report record earnings, but on May 1st, CBS proved
that it can do both.
"As great as these last few years have been, this quarter tops
it all,"- "What's most exciting is that we are poised to benefit
from all of the strategic actions we've taken - and continue to
take - for a long, long time. We have the best content and the
right management to ensure success, and as a result, I have never
been more confident about our Company's future than I am today"
noted CBS Chairman Sumner Redstone on their conference
Mr. Redstone has been chairman of CBS since they and Viacom
split apart in 2005. CEO Leslie Moonves also pointed out the
fact that CBS has been extremely successful in augmenting their
business to capitalize on the new media landscape.
CBS saw advertising revenues increase 5%, with growth in network
primetime and sports advertising. The "NCAA Tournament"
gave the quarter a comparative boost being that it aired during Q1
2012 versus Q2 in 2011. That could take away from next quarters
results…Affiliate and subscription fee revenues also rose 7%, led
by growth at Cable Networks and higher retransmission revenues.
Company Description & Financial Profile
CBS Corporation, together with its subsidiaries, operates as a
global, diverse mass media company. CBS has operations in virtually
every field of media and entertainment, including broadcast
television (CBS, The CW), cable television (Showtime, Smithsonian
and CBS Sports Networks), local television, television production
and syndication, radio, advertising on out-of-home media (CBS
Outdoor), publishing (Simon & Schuster), interactive media (CBS
Interactive), licensing and merchandising (CBS Consumer Products),
video/DVD, motion pictures (CBS Films) and socially responsible
CBS is a large-cap ($21.4 billion) company that has a trailing
P/E ratio of 15.5, which is above the average media industry P/E
ratio of 15.4, but below the S&P 500 P/E ratio of 17.5.
The forward P/E for the next earnings period is below 13.5.
CBS became a Zacks Rank 1 Strong Buy on May 4th.
Earnings & Expectations
As stated, the recent report was strong; CBS saw revenues of $3.9
billion up 12% compared to Q1 2011, operating income came in at
$642 million up 47% for the year which generated 54 cents in
diluted EPS, a leap of 86% of the same period one year ago.
CBS also refinanced 700 million in debt (senior notes) from
6.75% down to 3.375%, which should amount to an annualized net
interest expense savings of $22 million. They continued their share
repurchase program, bringing the shares acquired total to 51.2
million at an average cost of $25. This leaves approximately
60% more or $1.71 billion worth of shares left to purchase under
the current authorized program.
CBS is expected to earn $0.59 per share this quarter and $2.45
in FY2012 according to the Zacks Consensus Estimate. CBS
reports Q2 earnings on August 7th. Currently there are 17
analysts that rate CBS Corporation a buy, no analysts rate it a
sell, and seven rate it a hold. Of the analysts who cover
CBS, the consensus is for the company to grow earnings by 26.2% in
the current year (FY2012) and roughly 14% in FY2013.
Market Performance & Technicals
CBS has about doubled in price since its October lows near $17. The
stock has maintained momentum above its 50 day moving average since
mid-October; the 50 day moving average now stands at $32.12, just
below the current price of $32.90.
This level will be key support for CBS in the short term and if
CBS can hold it, may provide a bounce for the stock and a
reassurance of its bullish momentum. Watch the 20 day
moving average of $33.02, as it's moving closer towards the 50
day. A cross below the 50 could also signal a change in CBS's
CBS has exceeded the S&P 500's performance by 21.79% in the
past year and almost 8% in the past 3 months. The recent
correction in CBS stock puts it ahead of the S&P's returns by
only 2.26% for the last month, but the cheaper shares may be
attractive here. Watch the technicals in the short term.
Jared A Levy is the Momentum Stock Strategist for Zacks.com. He
is also the Editor in charge of the market-beating
Zacks Whisper Trader Service.
CBS CORP (CBS): Free Stock Analysis Report
CBS CORP (CBS): Free Stock Analysis Report
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