On Mar 5, 2014, we issued an updated research report on
). Ever since CBS posted better-than-expected fourth-quarter 2013
results (on Feb 12), the Zacks Consensus Estimate has been
trending upward. The company has exhibited a bullish run
throughout 2013. Moreover, the stock has garnered a return of
nearly 9.2% since the earnings release.
The company's fourth-quarter top and bottom lines handily
surpassed the Zacks Consensus Estimate while rising nearly 6% and
22% year over year. CBS Corp. highly benefited from content
monetization. Moreover, the company has beaten the Zacks
Consensus Estimate in the trailing four quarters by an average of
Given the strong run, for 2014, the Zacks Consensus Estimate
moved up to $3.48 from $3.44 and for 2015, it has risen to $4.02
from $3.96, over the last 30 days.
CBS Corp. continues to focus on content monetization as well as
streaming deals. The company has entered into several long-term
streaming deals for CW content with
), HULU and
) among others to put its programming (
Under The Dome
for HULU) on a diverse range of platforms and thereby generate
Further, CBS Corp. is active in adding other diverse revenue
streams to hedge against economic cycles. For example, it is
constantly expanding in the fast growing live gaming and eSports
market. Notably, the company's non-advertising revenues
contributed 42% to the total revenue in 2013, which was the
highest to date.
Additionally, CBS Corp. remains an asset for yield-seeking
investors. In 2013, CBS repurchased 545.8 million shares at a
cost of $2.2 billion. The company also announced a $1.5 billion
accelerated share repurchase program (to be executed using
proceeds from Outdoors IPO).
It expects to buy back $2 billion worth of shares in the first
quarter of 2014, with the remaining $500 million coming from the
existing share repurchase authorization. The existing share
buyback authorization stands at an impressive $6 billion.
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However, advertising continues to be a major source of revenues
in spite of diversification, which poses a concern. Apart from
this, CBS Corp. operates in a highly competitive media market
with other major players and this is a challenge as well.
Currently, CBS Corp. carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Another stock worth considering in the media sector is
The Walt Disney Company
) with a Zacks Rank #2 (Buy).