CBS Corporation looks promising, buoyed by its growth initiatives and sturdy top- and bottom-line performance. The stock hit a 52-week high of $64.04 on Dec 9, closing lower at $62.56. Also, its share price has surged a whopping 32.7% on a year-to-date basis, outperforming the Zacks categorized Broadcasting-Radio/TV industry growth of just 0.7%. Further, the company has a long-term earnings growth rate of 13.7%. Let’s delve deeper to explore more about the stock.
CBS Corp.’s sustained focus on increasing its subscription-based revenues is likely to drive long-term growth. It has an extensive library of premium content that it monetizes over multiple platforms. In addition, the company launched an independent streaming service for its premier channel – Showtime – available on Apple, Roku, Hulu and Sony PlayStation as well. Going forward, CBS Corp. believes that Showtime over-the-top (OTT) will prove to be a strong revenue driver.
Further, the company had launched a new commercial-free subscription for its OTT service called CBS All Access. Notably, CBS All Access offers its viewers several options as to how they can watch CBS shows, along with further access to the existing content.
Moreover, this content will include the entire current seasons of primetime hits and the subscribers can view on-demand library of over 7,500 episodes. Alongside, the Star Trek series will be launched on CBS Television Network after a special broadcast preview. These moves are likely to enhance customers’ viewing experience.
Now heading toward the company’s performance, we note that CBS Corp. continued with its positive earnings surprise streak for the seventh straight quarter as it reported third-quarter 2016 results. It also beat the revenue estimate for the fourth quarter in row.
The top line benefited from a 6% rise in content licensing and distribution revenues and also due to 32% surge in retransmission revenues. Going forward, Management expects revenues to increase further with 21% of retransmission and 14% of reverse compensation set for renewal.
However, CBS Corp. faces intense competition from other broadcast radio and television networks, alongside remaining highly vulnerable to the advertising market. Additionally, currency fluctuations and higher expenditure for original programming might be a drag.
Nonetheless, the company stated earlier that retransmission consent and reverse compensation are likely to exceed $2 billion in 2020. Notably, it is on track to achieve $1 billion in 2016, a year earlier than previously anticipated.
Per the sources, the owner of Showtime may re-merge with Viacom, Inc. , a media conglomerate. Whether this merger will come out with flying colors or the other way round is a wait-and-see story.
Stocks that Warrant a Look
Some better-ranked stocks in the same industry include The Liberty Media Group and Central European Media Enterprises Ltd. .
The Liberty Media has jumped 69.1% in the past six months and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Central European Media, which carries a Zacks Rank #2 (Buy), has gained 19.1% in the past three months.
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CBS Corp. Strategic Initiatives Bode Well: Hold the Stock
CBS Corporation looks promising, buoyed by its growth initiatives and sturdy top- and bottom-line performance. The stock hit a 52-week high of $64.04 on Dec 9, closing lower at $62.56. Also, its share price has surged a whopping 32.7% on a year-to-date basis, outperforming the Zacks categorized Broadcasting-Radio/TV industry growth of just 0.7%. Further, the company has a long-term earnings growth rate of 13.7%. Let’s delve deeper to explore more about the stock.
CBS Corp.’s sustained focus on increasing its subscription-based revenues is likely to drive long-term growth. It has an extensive library of premium content that it monetizes over multiple platforms. In addition, the company launched an independent streaming service for its premier channel – Showtime – available on Apple, Roku, Hulu and Sony PlayStation as well. Going forward, CBS Corp. believes that Showtime over-the-top (OTT) will prove to be a strong revenue driver.
Further, the company had launched a new commercial-free subscription for its OTT service called CBS All Access. Notably, CBS All Access offers its viewers several options as to how they can watch CBS shows, along with further access to the existing content.
Moreover, this content will include the entire current seasons of primetime hits and the subscribers can view on-demand library of over 7,500 episodes. Alongside, the Star Trek series will be launched on CBS Television Network after a special broadcast preview. These moves are likely to enhance customers’ viewing experience.
Now heading toward the company’s performance, we note that CBS Corp. continued with its positive earnings surprise streak for the seventh straight quarter as it reported third-quarter 2016 results. It also beat the revenue estimate for the fourth quarter in row.
The top line benefited from a 6% rise in content licensing and distribution revenues and also due to 32% surge in retransmission revenues. Going forward, Management expects revenues to increase further with 21% of retransmission and 14% of reverse compensation set for renewal.
CBS CORP Price and Consensus
CBS CORP Price and Consensus | CBS CORP Quote
However, CBS Corp. faces intense competition from other broadcast radio and television networks, alongside remaining highly vulnerable to the advertising market. Additionally, currency fluctuations and higher expenditure for original programming might be a drag.
Nonetheless, the company stated earlier that retransmission consent and reverse compensation are likely to exceed $2 billion in 2020. Notably, it is on track to achieve $1 billion in 2016, a year earlier than previously anticipated.
Per the sources, the owner of Showtime may re-merge with Viacom, Inc. , a media conglomerate. Whether this merger will come out with flying colors or the other way round is a wait-and-see story.
Stocks that Warrant a Look
Some better-ranked stocks in the same industry include The Liberty Media Group and Central European Media Enterprises Ltd. .
The Liberty Media has jumped 69.1% in the past six months and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Central European Media, which carries a Zacks Rank #2 (Buy), has gained 19.1% in the past three months.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>