Following the second quarter earnings announcement on May 3,
most of the analysts covering
) have raised their estimates mainly based on the huge number of
movies slated to release in 2012 coupled with improved advertising
spending in the U.S. due to the upcoming presidential election to
be held in 2012.
Second Quarter Highlights
Net income from continuing operations in the quarter was $588
million or $1.08 per share compared with $376 million or 63 cents
per share in the comparable prior-year quarter. Adjusted EPS of 98
cents was also above the Zacks Consensus Estimate of 90 cents.
Total revenue in the reported quarter was $3,331 million, up 2%
year over year and also beat the Zacks Consensus Estimate of $3,317
million. The year-over-year upside in revenue was mainly
attributable to the strong performance of the Media Networks
affiliated revenue segments. Quarterly operating income was $932
million, up 22.6% year over year.
Agreements of Analysts
Although most analysts are positive for 2012, out of the 24
analysts covering the stock in the last 7 days, none raised
estimates for the third quarter of 2012 but eight analysts reduced
the same. For the fourth quarter of 2012, seven analysts have
raised the EPS estimate but only one analyst slashed the estimate
over the last 7 days.
For fiscal 2012, out of the 28 analysts, eight analysts
increased the estimates while none reduced the same. However, for
2013, out of the 27 analysts, four analysts revised the estimate
upward while two moved in the opposite direction.
Currently, the Zacks Consensus EPS Estimate for the second
quarter of 2012 is pegged at $1.03. The projected annual growth
rate is 4.08%. Similarly, for the third quarter, the current Zacks
Consensus EPS Estimate of $1.24 reflects a year-over-year gain of
Magnitude of Estimate Revisions
Over the last 7 days, the Zacks Consensus Estimate for the third
quarter of 2012 dropped 4 cents from the earlier estimate of $1.07.
However, for the fourth quarter of fiscal 2012, the Zacks Consensus
Estimate was 2 cents above the earlier estimate of $1.22.
For fiscal 2012, the estimate went 2 cents above the previous
estimate of $4.27 in the last 7 days, while in fiscal 2013, it was
in line with the prior estimate of $4.99.
Over the last four quarters, Viacom has outdone the Zacks
Consensus Estimate by an average of 7.22%. In the last quarter, the
company produced an earnings surprise of 8 cents or 8.89%.
The current Zacks Consensus Estimate for the third and fourth
quarters of 2012 reflect 0.00% earning surprise (indicating that
the company should report in line with estimates in both
Fiscal 2012 should also show an earnings surprise of 0.00% but
fiscal 2013 has a downside risk of 0.60%.
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 the fact that it is a player in one of the fastest-growing
markets (traditional ad media).
However, stiff competition from other media companies like
Time Warner Inc.
) along with slow economic recovery may act as headwinds for the
stock going forward. We, therefore, maintain our long-term Neutral
recommendation on 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:
NEWS CORP INC-A (NWSA): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
VIACOM INC-B (VIAB): Free Stock Analysis Report
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