Following the fiscal third-quarter 2012 (ended June 30, 2012)
earnings announcement on August 3, most analysts covering
Viacom Inc.
(
VIAB
) have remained bearish on the stock. Operational challenges in
both the Media Network and Filmed Entertainment segment are the
primary reason for the revised outlook.
Third Quarter Highlights
Net income from continuing operations was $523 million or 99
cents per share, compared with $574 million or 97 cents in the
year-ago quarter. Adjusted EPS came in at 97 cents, falling short
of the Zacks Consensus Estimate at $1.00.
Total revenue of $3,241 million was down 14% year over year, and
also below the Zacks Consensus Estimate of $3,511 million.
Operating income decreased 8.0% year over year to $903 million.
Agreements of Analysts
Over the past 30 days, nineteen out of 24 estimates
for the fourth quarter of fiscal 2012 have declined.
Similarly, ten out of 12 estimates for the first quarter
of fiscal 2013 have moved lower.
The past 30 days have seen 25 of 27 estimates for fiscal 2012,
25 out of the 27 estimates decline, while 24 of 27 for fiscal 2013
also moved lower.
Currently, the Zacks Consensus Estimate for the fourth quarter
of fiscal 2012 is pegged at $1.19. The projected annual growth is
12.30%. For the first quarter of fiscal 2013, the Zacks Consensus
Estimate of $1.24 indicates an annualized growth of 16.75%.
Magnitude of Estimate Revisions
The Zacks Consensus Estimate for the fiscal fourth quarter of
fiscal 2012 is $1.19 per share, which is down 6 cents in the past
30 days, while the estimate for the fiscal first quarter of 2013
has declined by 2 cents in that time to $1.24.
The Zacks Consensus Estimate for fiscal 2012 has declined 8
cents in the past 30 days to $4.21 per share, while the Zacks
Consensus Estimate for fiscal 2013 has slumped 15 cents to
$4.82.
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,
strong share repurchase plan, multi-platform content, and is one of
the fastest growing traditional ad media companies.
However, stiff competition from other media companies like
News Corp.
(
NWSA
) and
Time Warner Inc.
(
TWX
) along with flop movie releases and mounting debt may act as
headwinds for the stock going forward. We thus maintain our
long-term Neutral recommendation on Viacom.
Currently, VIAB 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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