Viacom Inc.
(
VIAB
) declared decent first quarter 2012 financial results, with EPS
matching the Zacks Consensus Estimate but revenue falling short of
the estimate.
Fourth Quarter Highlights
Net income from continuing operation in the quarter was $591
million or $1.06 per share compared with $620 million or $1.02 per
share in the prior-year quarter and was also in line with the Zacks
Consensus Estimate.
Total revenue in the reported quarter was $3,952 million, up 3%
year over year but was slightly below the Zacks Consensus Estimate
of $3,979 million. The year-over-year upside in revenue was mainly
attributable to the strong performance of Filmed Entertainment and
Media Networks segments. Quarterly operating income declined 2%
year over year to $1,016 million.
Agreements of Analysts
Of the 23 analysts covering the stock in the last 7 days, none
increased the estimate upward for the second quarter of 2012 but
one analyst reduced the same. Likewise, for the third quarter of
2012, in the last 7 days, only one analyst decreased the EPS
estimate.
For fiscal 2012, out of the 27 analysts, none of the analysts
raised the estimates but one slashed the estimate for the same.
However, for 2013, out of the 23 analysts, only one analyst revised
the estimate upward.
Currently, the Zacks Consensus EPS Estimate for the second
quarter of 2012 is pegged at 90 cents. The projected annual growth
rate is 13.15%. Similarly, for the third quarter, the current Zacks
Consensus EPS Estimate of $1.14 reflects a year-over-year gain of
14.71%.
Magnitude of Estimate Revisions
For the second and third quarter of 2012, the current Zacks
Consensus Estimates remained in line with the previous estimate of
90 cents and $1.14, respectively, over the last 7 days. Likewise,
for fiscal 2012, the Zacks Consensus Estimate was also at par with
the previous estimate of $4.28. However, for fiscal 2013, the
current estimate was just a penny above the previous estimate of
$5.03.
Earning Surprises
In the last quarter, Viacom's reported EPS in line with the
Zacks Consensus Estimate of 90 cents. The current Zacks Consensus
Estimate for the second quarter of 2012 reflects a 0.00% earning
surprise but the upcoming quarter contains downside potential
of 1.11% (essentially a proxy for future earnings surprises) while
for fiscal 2012 and fiscal 2013, the Zacks Consensus Estimates'
upside potentials are 0.23% and 0.00%, respectively.
Our Recommendation
We believe that Viacom is well positioned for long-term growth
as it continues to benefit from its predominately cable
networks-based business model, strong affiliate fee revenue growth,
global brands, strong share repurchase plan, multi-platform
content, and is one of the fastest growing traditional ad media
companies.
However, stiff competitions from other media companies like
News Corp.
(
NWSA
) and
Time Warner Inc.
(
TWX
) along with slow economic recovery may act as headwinds for the
stock going forward. We, thus, maintain our long-term Neutral
recommendation for Viacom.
Currently, Viacom has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force impacting
stock prices. He turned this ground breaking discovery into two
of the most celebrating stock rating systems in use today. The
Zacks Rank for stock trading in a 1 to 3 month time horizon and
the Zacks Recommendation for long-term investing (6+ months).
These "Earnings Estimate Scorecard" articles help analyze the
important aspects of estimate revisions for each stock after
their quarterly earnings announcements. Learn more about earnings
estimates and our proven stock ratings at:
http://www.zacks.com/education/
NEWS CORP INC-A (
NWSA
): Free Stock Analysis Report
TIME WARNER INC (
TWX
): Free Stock Analysis Report
VIACOM INC-B (
VIAB
): Free Stock Analysis Report
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