CBS Corporation - Value

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CBS Corporation ( CBS ) is firing on all cylinders as it recently reported a record first quarter. Despite shares surging to 3-year highs, this Zacks #1 Rank (Strong Buy) has plenty of value, with a forward P/E of just 8.2.

CBS is a national media company with broadcast television through CBS and The CW networks, cable television through Showtime, Smithsonian Networks and CBS Sports Network, local television stations, television production and syndication, radio, publishing through Simon & Schuster, video/DVD, motion pictures through CBS Films, licensing and merchandising and interactive media.

A Record Q1

On May 1, CBS reported its first quarter results and easily blew by the Zacks Consensus Estimate by 22.7%. Earnings jumped 86% to 54 cents compared to the 29 cents it made in the prior year. The consensus was looking for just 44 cents.

It kept alive an impressive earnings surprise history of 8 consecutive quarters with a earnings beat.

Revenue rose 12% to $3.9 billion from $3.5 billion. It was boosted by a 39% increase in content licensing and distribution which saw big gains from licensing agreements for digital streaming.

Advertising revenue, which is its largest revenue generator, also rose 5% thanks to growth in network primetime and sports advertising, including the NCAA Basketball Tournament, which aired during the first quarter versus airing in the second quarter a year ago.

Entertainment, its largest segment, saw revenue rise 16% to $2.3 billion from $1.99 billion mainly due to the licensing of television programming for digital streaming and syndication.

2012 Zacks Consensus Estimate Moves Higher

2 estimates moved higher over the last 30 days which pushed up the Zacks Consensus Estimate by 2 cents to $2.49 per share.

This is earnings growth of 28% as the company only made $1.94 last year.

Value Alert!

Shares have been on a tear. They recently hit 3 year highs and don't look like they're coming up for breath any time soon.

But surprisingly, there is still a lot of value in the shares.

In addition to a low P/E, the company has two other indicators that are flashing "value."

CBS has a price-to-book ratio of 2.0. A P/B ratio under 3.0 usually means there is value in the company.

It also has a price-to-sales ratio of 0.5. A P/S ratio under 1.0 can indicate a company is undervalued.

CBS has other strong fundamentals as well, including a 1-year return on equity (ROE) of 25.2%.

To top it off, shareholders are rewarded with a dividend, currently yielding 1.3%.

This media company has found the sweet spot of both value and growth. Investors just might want to tune in.

Tracey Ryniec is the Value Stock Strategist for Zacks.com . She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec .


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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