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TiVo Corp. (TIVO) Continues its Impressive Run: Time to Buy?
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While everyone is busy making New Year resolutions, a successful portfolio manager will be busy devising strategies that help to boost wealth in 2017. This is only possible by investing in stocks, which are poised to yield solid returns this year and beyond.
At the moment, one such stock is TiVo Corporation . Shares of this digital home entertainment services and solutions provider have outperformed the Zacks Internet Services industry over the past one year. TiVo’s shares generated a return of 22.3% compared with 3.4% generated by the industry.
The company’s current quarter earnings estimates moved up by 31 cents over the last 60 days to 45 cents. Given its progress on the fundamentals and a robust Zacks Rank, the stock is likely to keep performing well in the quarters ahead.
TiVo and Rovi Merger
TiVo was formerly known as Rovi Corporation. Prior to its acquisition, Rovi provided a set of solutions that allowed businesses to protect and distribute digital goods to consumers, helping them discover and manage digital media across multiple channels. On the other hand, TiVo Inc. pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company expanded its capabilities beyond hardware sales and patent licensing to online subscription services.
Therefore, the merger has brought together two leading players in the media entertainment industry with complementary products and services as well as a number of patented technologies. The two companies have been witnessing stiff competition from Internet video providers such as Alphabet’s (GOOGL - Free Report) YouTube, Netflix, Apple (AAPL - Free Report) and Roku. Notably, TiVo and Rovi were arch rivals before their merger.
The new TiVo is the global leader in entertainment technology and audience insights. The company has a diverse product portfolio that ranges from interactive program guide to DVR. The combined company has emerged as the world’s leading media and entertainment provider to deliver the ultimate entertainment experience.
Apart from this, the combined company has over 6,000 issued and pending patents, which offer it a competitive advantage over other media and tech giants.
What’s Going in TiVo’s Favor?
TiVo entered into a series of deals pertaining to products, licensing and intellectual property agreement with streaming video giant Netflix Inc. (NFLX - Free Report) .
Per the product agreement, TiVo will carry on navigating user interface and will integrate web entertainment from Netflix to its set-top boxes. These services will be available to consumers through pay-TV providers and retail stores.
TiVo currently provides software solutions to more than 70 Pay-TV operators across 30 countries. Therefore, the deal is expected to expand TiVo’s product offerings as well as global presence, which in turn will boost revenues.
Separately, as part of an intellectual property agreement, Netflix now has a license to TiVo patent portfolios for over-the-top (OTT) offerings.
We believe that an agreement through these licensing agreements would be incrementally beneficial for the company. Additionally, the deal will enhance user experience and provide the company the necessary competitive edge in the emerging market of online video streaming.
The company also reported strong third-quarter 2016 results on Nov 3, 2016 with year-over-year improvement in its top and bottom lines., Since then, the share price has moved north by 9%. Moreover, the company’s outlook for the full year was encouraging.
Upon successful completion of the acquisition of TiVo Inc., the new company now anticipates to generate revenues in the range of $620 million to $630 million in 2016, higher than the Zacks Consensus Estimates, which is pegged at $619 million.
TiVo also delivered positive earnings surprises in three out of the last four quarters with an average beat of 97.8%.
Moreover, combined with other attractive features like high return on equity (ROE) and high return on assets (ROA), the stock looks very attractive. While its ROE indicates that the company is reinvesting its cash at a high rate of return, ROA is the profit that it earns for every dollar of its assets. TiVo currently trades at a ROE of 13.6%, much higher than the peer average of 10.6%. Notably, the company has an ROA of 6.7% compared with the peer average of 4.8%.
TiVo’s remarkable run may continue as the company is currently trading at a lower price/earnings (P/E) multiple than the peer average. Therefore, we believe that TiVo with its lower forward P/E valuation of 12.6x compared with the peer average of 15.0x may be a virtuous bet.
The stock’s long-term earnings per share growth rate is 10%.
Last Words
While most New Year resolutions fall by the wayside within weeks, that doesn't mean that these trends will meet the same fate. For an investor, this company offers an easy way to get tap these booming trends. What better way to start the New Year than by investing in stocks such as TiVo.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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TiVo Corp. (TIVO) Continues its Impressive Run: Time to Buy?
While everyone is busy making New Year resolutions, a successful portfolio manager will be busy devising strategies that help to boost wealth in 2017. This is only possible by investing in stocks, which are poised to yield solid returns this year and beyond.
At the moment, one such stock is TiVo Corporation . Shares of this digital home entertainment services and solutions provider have outperformed the Zacks Internet Services industry over the past one year. TiVo’s shares generated a return of 22.3% compared with 3.4% generated by the industry.
This price performance of the Zacks Rank #1 (Strong Buy) stock is backed by solid estimate revision. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s current quarter earnings estimates moved up by 31 cents over the last 60 days to 45 cents. Given its progress on the fundamentals and a robust Zacks Rank, the stock is likely to keep performing well in the quarters ahead.
TiVo and Rovi Merger
TiVo was formerly known as Rovi Corporation. Prior to its acquisition, Rovi provided a set of solutions that allowed businesses to protect and distribute digital goods to consumers, helping them discover and manage digital media across multiple channels. On the other hand, TiVo Inc. pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company expanded its capabilities beyond hardware sales and patent licensing to online subscription services.
Therefore, the merger has brought together two leading players in the media entertainment industry with complementary products and services as well as a number of patented technologies. The two companies have been witnessing stiff competition from Internet video providers such as Alphabet’s (GOOGL - Free Report) YouTube, Netflix, Apple (AAPL - Free Report) and Roku. Notably, TiVo and Rovi were arch rivals before their merger.
The new TiVo is the global leader in entertainment technology and audience insights. The company has a diverse product portfolio that ranges from interactive program guide to DVR. The combined company has emerged as the world’s leading media and entertainment provider to deliver the ultimate entertainment experience.
Apart from this, the combined company has over 6,000 issued and pending patents, which offer it a competitive advantage over other media and tech giants.
What’s Going in TiVo’s Favor?
TiVo entered into a series of deals pertaining to products, licensing and intellectual property agreement with streaming video giant Netflix Inc. (NFLX - Free Report) .
Per the product agreement, TiVo will carry on navigating user interface and will integrate web entertainment from Netflix to its set-top boxes. These services will be available to consumers through pay-TV providers and retail stores.
TiVo currently provides software solutions to more than 70 Pay-TV operators across 30 countries. Therefore, the deal is expected to expand TiVo’s product offerings as well as global presence, which in turn will boost revenues.
Separately, as part of an intellectual property agreement, Netflix now has a license to TiVo patent portfolios for over-the-top (OTT) offerings.
We believe that an agreement through these licensing agreements would be incrementally beneficial for the company. Additionally, the deal will enhance user experience and provide the company the necessary competitive edge in the emerging market of online video streaming.
The company also reported strong third-quarter 2016 results on Nov 3, 2016 with year-over-year improvement in its top and bottom lines., Since then, the share price has moved north by 9%. Moreover, the company’s outlook for the full year was encouraging.
Upon successful completion of the acquisition of TiVo Inc., the new company now anticipates to generate revenues in the range of $620 million to $630 million in 2016, higher than the Zacks Consensus Estimates, which is pegged at $619 million.
TiVo also delivered positive earnings surprises in three out of the last four quarters with an average beat of 97.8%.
Moreover, combined with other attractive features like high return on equity (ROE) and high return on assets (ROA), the stock looks very attractive. While its ROE indicates that the company is reinvesting its cash at a high rate of return, ROA is the profit that it earns for every dollar of its assets. TiVo currently trades at a ROE of 13.6%, much higher than the peer average of 10.6%. Notably, the company has an ROA of 6.7% compared with the peer average of 4.8%.
TiVo’s remarkable run may continue as the company is currently trading at a lower price/earnings (P/E) multiple than the peer average. Therefore, we believe that TiVo with its lower forward P/E valuation of 12.6x compared with the peer average of 15.0x may be a virtuous bet.
The stock’s long-term earnings per share growth rate is 10%.
Last Words
While most New Year resolutions fall by the wayside within weeks, that doesn't mean that these trends will meet the same fate. For an investor, this company offers an easy way to get tap these booming trends. What better way to start the New Year than by investing in stocks such as TiVo.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>