Earning Scorecard: Viacom - Analyst Blog

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Viacom Inc. ( VIAB ) declared decent first quarter 2012 financial results, with EPS matching the Zacks Consensus Estimate but revenue falling short of the estimate.

Fourth Quarter Highlights

Net income from continuing operation in the quarter was $591 million or $1.06 per share compared with $620 million or $1.02 per share in the prior-year quarter and was also in line with the Zacks Consensus Estimate.

Total revenue in the reported quarter was $3,952 million, up 3% year over year but was slightly below the Zacks Consensus Estimate of $3,979 million. The year-over-year upside in revenue was mainly attributable to the strong performance of Filmed Entertainment and Media Networks segments. Quarterly operating income declined 2% year over year to $1,016 million.

Agreements of Analysts

Of the 23 analysts covering the stock in the last 7 days, none increased the estimate upward for the second quarter of 2012 but one analyst reduced the same. Likewise, for the third quarter of 2012, in the last 7 days, only one analyst decreased the EPS estimate.

For fiscal 2012, out of the 27 analysts, none of the analysts raised the estimates but one slashed the estimate for the same. However, for 2013, out of the 23 analysts, only one analyst revised the estimate upward.

Currently, the Zacks Consensus EPS Estimate for the second quarter of 2012 is pegged at 90 cents. The projected annual growth rate is 13.15%. Similarly, for the third quarter, the current Zacks Consensus EPS Estimate of $1.14 reflects a year-over-year gain of 14.71%.

Magnitude of Estimate Revisions

For the second and third quarter of 2012, the current Zacks Consensus Estimates remained in line with the previous estimate of 90 cents and $1.14, respectively, over the last 7 days. Likewise, for fiscal 2012, the Zacks Consensus Estimate was also at par with the previous estimate of $4.28. However, for fiscal 2013, the current estimate was just a penny above the previous estimate of $5.03.

Earning Surprises

In the last quarter, Viacom's reported EPS in line with the Zacks Consensus Estimate of 90 cents. The current Zacks Consensus Estimate for the second quarter of 2012 reflects a 0.00% earning surprise but the upcoming quarter contains downside potential of 1.11% (essentially a proxy for future earnings surprises) while for fiscal 2012 and fiscal 2013, the Zacks Consensus Estimates' upside potentials are 0.23% and 0.00%, respectively.

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, global brands, strong share repurchase plan, multi-platform content, and is one of the fastest growing traditional ad media companies.

However, stiff competitions from other media companies like News Corp. ( NWSA ) and Time Warner Inc. ( TWX ) along with slow economic recovery may act as headwinds for the stock going forward. We, thus, maintain our long-term Neutral recommendation for 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 Report

TIME WARNER INC ( TWX ): Free Stock Analysis Report

VIACOM INC-B ( VIAB ): Free Stock Analysis Report

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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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