For Immediate Release
Chicago, IL - May 1, 2012 - Zacks.com announces the list of
stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
CBS Corporation
(
CBS
),
News Corporation
(
NWSA
),
Comcast Corporation
(
CMCSA
),
SLM Corp.
(
SLM
) and
Nelnet Inc.
(
NNI
).
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Here are highlights from Monday's Analyst Blog:
Earnings Preview: CBS Corporation
CBS Corporation
(
CBS
) is slated to report its first-quarter 2012 financial results on
Tuesday, May 1. The current Zacks Consensus Estimate for the
quarter stands at 43 cents per share, indicating an estimated
increase of 48.3% from the prior-year quarter. Revenue, as per the
Zacks Consensus Estimate, is $3,775 million.
Fourth-Quarter 2011, a Synopsis
CBS Corporation's quarterly earnings of 57 cents a share
surpassed the Zacks Consensus Estimate of 53 cents, surging 23.9%
from 46 cents earned in the year-ago quarter.
However, revenue inched down 3.1% year over year to $3.78
billion, which was a healthy number as the quarter lacked
significant political advertising revenues compared with the
prior-year quarter. Moreover, the prior-year quarter's revenue
included the second-cycle syndication sale of
CSI: Crime Scene Investigation
.
Estimate Revisions Trend
Agreement
A positive sentiment is evident among the analysts for the
upcoming quarter. Among the 21 analysts providing estimates for the
quarter, four revised their estimates upward while none moved in
the opposite direction in the last 30 days. For fiscal 2012, five
analysts revised the estimates in the upward direction while none
lowered the same.
Magnitude
The Zacks Consensus Estimate for the first quarter remained
stable over the last 30 days. Most of the analysts remained
constructive on the stock based on the company's growth prospects.
The Zacks Consensus Estimate inched up a penny to $2.36 for fiscal
2012 as the analysts expect healthy political TV advertising
revenues, which in turn, is anticipated to boost profitability.
According to the company's Chief Executive Officer Les Moonves,
profits are forecast to rise by $180 million, primarily due to
political ads, and surpass the profits of the last presidential
election year.
Positive Surprise History
With respect to earnings surprises, CBS Corporation has topped
the Zacks Consensus Estimate over the last four quarters in the
range of 7.6% to 52.6%. The average remained at 24.4%, indicating
that the company has outperformed the Zacks Consensus Estimate by
that same measure in the trailing four quarters.
Our Take
CBS remains well positioned to drive revenue in the coming
quarters through its strategic initiatives and operating
efficiencies. Management remains optimistic and expects the growth
momentum to continue in fiscal 2012 based on strong political
advertising, reverse compensation from affiliates, strong demand of
its content and streaming and retransmission consent.
Moreover, CBS is likely to benefit from an increase in political
ad spending as it owns more TV stations than its competitors
News Corporation
's (
NWSA
) Fox and
Comcast Corporation
's (
CMCSA
) NBC.
Recently, the company through one of its divisions, CBS
Interactive, has entered into a partnership with TwitchTV, a
leading video game broadcasting network and Major League Gaming (
MLG
), the world's most renowned eSports league. The company's
expansion into the fastest growing live gaming and eSports market
is likely to enhance its profitability.
We believe that CBS Corporation's long-term agreements with the
NFL, the NCAA, the SEC and the Grammys will generate stream of
positive cash flows for the company in the long run.
Currently, we have a long-term 'Outperform' rating on the stock.
Moreover, CBS Corp. holds a Zacks #1 Rank, which translates into a
short-term 'Strong Buy' rating.
Sallie Mae Downgraded to Neutral
We are downgrading our recommendation on
SLM Corp.
(
SLM
), better known as Sallie Mae, to Neutral from Outperform based on
a tepid economic recovery and the impact of the legislative changes
on its business.
First Quarter Results
Aided by a fall in loan loss provisions and decrease in
expenses, Sallie Mae's first-quarter 2012 core earnings came in at
$284 million or 55 cents per share, beating the Zacks Consensus
Estimate of 52 cents. Results also compared favorably with the
prior-year quarter's core earnings of $260 million or 48 cents per
share. However, the company experienced a decline in net interest
income and reductions in debt repurchase gains.
On a GAAP basis, Sallie Mae's first-quarter 2012 net income came
in at $112 million or 21 cents per share, down from $175 million or
32 cents reported in the comparable quarter last year. Notably, in
the reported quarter, Sallie Mae experienced a $131 million
increase in unrealized "mark-to-market" losses on derivative
contracts compared with the year-ago period.
Sallie Mae has reiterated its guidance for 2012. For the full
year, management expects to generate core earnings of $2.00 per
share and anticipates private education loan originations of $3.2
billion.
Our Take
Sallie Mae has a leading position in the student lending market.
However, in order to comply with the legislation, the company along
with other student lenders such as
Nelnet Inc.
(
NNI
) has stopped originating new federal student loans. To respond to
such changes, the company is making efforts to diversify its
business.
Though such efforts are encouraging, we believe it would take
some more time for the company to reap the benefits of a transition
to its business model. Moreover, going forward, we believe that
with the run-off of its FFELP loan portfolio, its interest income
would be under pressure.
However, dividend hikes and increases in share buyback
authorization give a boost to investors' confidence. And despite
challenges, we anticipate that the company's cost containment
efforts would help it navigate through the current cycle.
Though the legislative actions challenged the company's business
model, we expect Sallie Mae to benefit from the Department of
Education's servicing contract, under which it would service and
collect government guaranteed loans. Given its low-cost business
structure, we believe this new role will support Sallie Mae's
profitability and help produce an acceptable risk-adjusted
return.
As such, the risk reward profile of Sallie Mae seems balanced
and hence, we have a Neutral recommendation on the stock.
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CBS CORP (
CBS
): Free Stock Analysis Report
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
NELNET INC CL-A (
NNI
): Free Stock Analysis Report
NEWS CORP INC-A (
NWSA
): Free Stock Analysis Report
SLM CORP (SLM): Free Stock Analysis Report
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