Shares of Time Warner Inc. (TWX - Analyst Report) surged to attain a new 52-week high of $70.58 on Oct 25, 2013, before closing at $70.26. Shares of this Zacks Rank #3 (Hold) stock have generated a year-to-date return of roughly 43.3%.
Based on the current price, this media and entertainment company is 2.4% below the Zacks Consensus average analyst price target of $68.63. The company currently trades at a forward P/E of 18.75x, a 2.9% premium to the peer group average of 18.22x. Additionally, the company’s long-term estimated EPS growth rate is 10.9%.
We believe Time Warner’s initiatives such as foraying into new markets, divestment activities and digital endeavors would augur well for its operating performance in the future. Moreover, the company’s investments in programming, production and marketing along with its focus on operating and capital efficiencies appear to be encouraging. Time Warner has been expanding its digital presence to allow consumers to enjoy content on a wide range of platforms and devices. We are optimistic about management’s expectations to achieve mid-teens EPS growth in 2013.
Time Warner has been benefiting from its significant international presence as it helped the company broaden its client base and product portfolio. The company operates in the United Kingdom, Germany, Canada, France, Japan and other countries apart from the United States.
It entered into a partnership with China’s leading media and entertainment investment fund, China Media Capital. In our view, this partnership complements the company’s strategy to expand its presence in the Chinese entertainment market. Moreover, Time Warner with its strong content and industry-leading portfolio of renowned brands is likely to benefit from the largest and fastest growing Chinese media sector. In recent years, China has emerged as an important market for media and entertainment companies.
Apart from Time Warner, other stocks such as Best Buy Co., Inc. (BBY - Analyst Report), The Walt Disney Company (DIS - Analyst Report) and Dollar General Corporation (DG - Analyst Report) achieved new 52-week highs of $43.70, $69.87 and $59.87, respectively, on Oct 25, 2013.