Personal Finance

Is Discovery Communications Stock a Good Value for 2017?


Discovery Communications (NASDAQ: DISCA) didn't have a great 2016. The company's stock rose just shy of 3% compared to the S&P 500 's nearly 9.5% gain. Yet CEO David Zaslav recently said in an interview that 2016 was the company's "best year ever." Is there a disconnect between the market and what is really going with the business? If that's the case, the stock could be worth considering for the new year.

The year in review

Discovery, which includes stations like its eponymous television network, TLC, and Animal Planet, has carved out a niche for itself as a provider of non-fiction television content. Zaslav's description of 2016 being the best year ever for the conglomeration of channels was correct from a top-line point of view.

Data by YCharts .

Yet the stock is well off of its all-time highs from a few years ago. Investor confidence has dried up as Discovery has struggled to move the needle higher against a backdrop of waning interest in cable and satellite TV subscriptions in the U.S. and consumer preference changing to one that looks for digital streaming content first.

The company has been working hard to develop its lineup of channels as well as change its format to appeal to the modern audience. The Oprah Winfrey Network, a joint venture Discovery is in on, continues to be a focus, and the male audience hasn't been ignored, with the development of the car-centric station Velocity.

DISCA Net Income (TTM) Chart

Data by YCharts .

With Discovery investing to stay relevant in an online streaming world and shares down steeply from all-time highs, the stock is worth a look. Shares currently have a trailing-12-month price-to-earnings ratio of 15.8 and a forward-12-month ratio of only 12.7. It looks to me like 2017 could hold better times as Discovery rounds out its digital transformation.

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Nicholas Rossolillo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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