), one of the leading media company in United States and worldwide,
reported its second-quarter 2012 results on August 2, 2012. The
Wall Street analysts had almost a week to ponder on the earnings
results and eventually make their estimates revision. Below, we
will cover the results of the company's recent earnings
announcement, subsequent estimate revisions by analysts as well as
the Zacks Rank and long-term recommendation for the stock.
Earnings Report Review
CBS Corporation's quarterly earnings of 65 cents a share
surpassed the Zacks Consensus Estimate of 58 cents and jumped 12%
from the year-ago quarter.
Management hinted that total revenue of $3,476 million dropped
3% over the prior-year quarter due to difficult year-over-year
comparisons. The prior-year quarter, benefited from a multi-year
digital streaming contract and the NCAA men's basketball
championships, which was aired in the first quarter of the current
year. Total revenue also fell short of the Zacks Consensus Estimate
of $3,543 million.
(Read our full coverage on this earnings report:
CBS Beats on Bottom Line
Agreement of Estimate Revision
The estimates showed multi-directional moves, reflecting
conflicts between the analysts. Out of 21 estimates for the
third-quarter of 2012, 7 were trimmed while 2 were revised upwards,
whereas for the fourth-quarter of 2012, out of 20 estimates, 8
moved up and 3 went down, in the last 7 days.
Most of the estimates were trimmed for the third quarter
following the plunge in advertising and content group revenue in
the second quarter 2012. Advertising revenue declined 3% to $2,142
million, whereas content licensing and distribution revenue slipped
8% to $816 million.
However, some of the analysts believe that CBS is comfortably
positioned to drive revenue growth in the coming quarter through
its strategic initiatives and operating efficiencies, and thus
moved their estimates upwards.
For the fourth-quarter 2012, majority of the analysts moved up
in regard to their estimates. The presidential elections will be
accretive to the company's results during the year-end. Moreover,
revenues from retransmission continue to grow at a good pace.
Further, the company is increasingly getting reverse compensation
from its affiliates, marking a new source of revenue.
For the fiscal 2012 and 2013, out of 25 estimates, 15 were
increased for both the fiscal, in the last 7 days.
Clearly, a positive sentiment was palpable among majority of the
analysts for fiscal 2012 and 2013. Management remains optimistic
and expects growth momentum to continue in fiscal 2012 based on
reverse compensation from affiliates, strong demand of its content
and online video streaming, retransmission consent, and political
advertising. In 2013, AFC Championship Game, the Super Bowl and the
Grammys will beneficial to CBS. Management expects reverse
compensation to surpass $100 million in 2013. Subsequently, an
upward revision in estimates was observed.
Magnitude of Estimate Revision
For the third-quarter 2012, the estimate fell by a penny to 62
cents, whereas for the fourth-quarter the estimate inched up by a
penny to 75 cents over the last 7 days.
During the same period, the Zacks Consensus Estimate for fiscal
2012 and 2013 increased by 4 cents and 5 cents to $2.55 and $2.89,
CBS, which competes with
Walt Disney Company
), is striving to add diverse revenue streams to become less
susceptible to the economic cycles. The retransmission fees,
syndication sales and streaming deals have been
non-advertising-driven revenue and will become the key growth
drivers for the top and bottom lines. CBS is eyeing more than $250
million in retransmission fees in fiscal 2012.
Based on the company's ability to generate healthy free cash
flow and returning excess cash to shareholders', CBS Corporation
carries Zacks #2 Rank implying short-term Buy rating for the next
1-3 months. We reiterate our long-term 'Outperform' recommendation
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
CBS CORP (CBS): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis
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