It has been about a month since the last earnings report for CBS Corporation . Shares have lost about 3.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CBS Beats Q1 Earnings & Revenue Estimates
CBS, which has entered into a deal with Entercom to merge its radio business, posted first-quarter 2017 adjusted earnings from continuing operations of $1.04 per share beating the Zacks Consensus Estimate of $0.95 and increasing 9% from the year-ago quarter.
On a reported basis, including one-time items, the company delivered loss of $0.61 per share compared with earnings of $1.02 posted in the prior-year period.
Moreover, total revenue of this diversified media conglomerate came in at $3,343 million that came ahead of the Zacks Consensus Estimate of $3,274 million but declined 7% year over year, as the prior-year quarter benefited from Super Bowl 50 and an extra National Football League playoff game. However, excluding these two non-comparable games, the quarterly revenue would have increased in high-single digits.
Further, affiliate and subscription fee revenue of $842 million grew 17% on the back of 28% jump in retransmission revenues and fees from CBS Television Network affiliated stations, as well as digital subscription services. Content licensing and distribution revenue surged 16% to $845 million on account of rise in domestic and international television licensing sales. However, total advertising revenue plunged 23% to $1,603 million.
Operating income declined 8% to $704 million, while operating margin contracted 20 basis points to 21.1%.
Segment Results
Segment wise, Entertainment revenue decreased 9% to $2,347 million, as the prior-year quarter gained from the broadcast of Super Bowl 50 and an extra National Football League playoff game on the CBS Television Network. Affiliate and subscription fees surged 28% on account of rise in station affiliation fees and subscription growth for CBS All Access. Content licensing and distribution revenue soared 21% attributable to higher domestic and international licensing sales. The segment’s operating income declined 11% to $398 million.
Cable Networks’ revenue jumped 3% to $543 million primarily owing to rise in affiliate and subscription fees on account of growth of the Showtime digital streaming subscription offering. However, this was partly offset by the timing of international television licensing sales of Showtime original series. The segment’s operating income increased 9% to $248 million mainly due to growth in higher-margin revenues.
Publishing revenue of $161 million jumped 11% year over year primarily due to increase in print book sales and digital audio sales. Bestselling titles for the quarter included Unshakeable by Tony Robbins and A Man called Ove by Fredrik Backman. Operating income came in at $14 million, up from $13 million in the year-ago period, as higher revenue was offset by increased production and selling costs.
Local Media revenue fell 9% to $409 million due to the absence of Super Bowl 50 and an extra National Football League playoff game this quarter. However, growth in retransmission revenue benefited the segment to an extent. Operating income declined 18% to $123 million mainly owing to fall in revenue.
Other Financial Details
CBS Corp. ended the quarter with cash and cash equivalents of $163 million, long-term debt of $8,900 million and shareholders’ equity of $2,885 million. In the quarter, net cash flow provided by operating activities was $719 million and capital expenditures incurred were $27 million. The company generated free cash flow of $651 million. During the quarter under review, the company bought back 7.6 million shares for $500 million.
Bottom Line
In 2016, the company crossed $1 billion mark in revenues from retransmission consent and reverse compensation. In 2017, management anticipates retransmission and reverse compensation to increase 25% from the prior year. The company aims to achieve $2.5 billion of revenues from retransmission and reverse compensation by 2020. Affiliate and subscription fees are benefiting from CBS All Access and Showtime OTT.
The company had launched CBS and Showtime on Google's YouTube TV, and debuted Showtime on Sling TV. CBS and Showtime have been also launched on Hulu's new live TV service. CBS Corp. is also well poised to monetize from its content licensing and distribution.
Moreover, with the launch of Showtime's streaming service; online news channel, CBSN; and over-the-top service, CBS All Access, the company is generating incremental revenue. The company is also extending its Showtime brand, which is now available in Spain, Canada, Australia and several key European markets.
Management hinted that second-quarter total revenue for Local Media is pacing up mid-single digits. Further, the company informed that the second quarter will benefit from the broadcast of the NCAA Final Four games. The company’s over-the-top service is gaining traction and expects healthy subscriber growth as it gears to launch Twin Peaks on Showtime and Star Trek: Discovery on CBS All Access.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 7.5% due to these changes.
CBS Corporation Price and Consensus
VGM Scores
At this time, CBS' stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable for growth investors and value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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CBS Corp (CBS) Down 3.3% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for CBS Corporation . Shares have lost about 3.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CBS Beats Q1 Earnings & Revenue Estimates
CBS, which has entered into a deal with Entercom to merge its radio business, posted first-quarter 2017 adjusted earnings from continuing operations of $1.04 per share beating the Zacks Consensus Estimate of $0.95 and increasing 9% from the year-ago quarter.
On a reported basis, including one-time items, the company delivered loss of $0.61 per share compared with earnings of $1.02 posted in the prior-year period.
Moreover, total revenue of this diversified media conglomerate came in at $3,343 million that came ahead of the Zacks Consensus Estimate of $3,274 million but declined 7% year over year, as the prior-year quarter benefited from Super Bowl 50 and an extra National Football League playoff game. However, excluding these two non-comparable games, the quarterly revenue would have increased in high-single digits.
Further, affiliate and subscription fee revenue of $842 million grew 17% on the back of 28% jump in retransmission revenues and fees from CBS Television Network affiliated stations, as well as digital subscription services. Content licensing and distribution revenue surged 16% to $845 million on account of rise in domestic and international television licensing sales. However, total advertising revenue plunged 23% to $1,603 million.
Operating income declined 8% to $704 million, while operating margin contracted 20 basis points to 21.1%.
Segment Results
Segment wise, Entertainment revenue decreased 9% to $2,347 million, as the prior-year quarter gained from the broadcast of Super Bowl 50 and an extra National Football League playoff game on the CBS Television Network. Affiliate and subscription fees surged 28% on account of rise in station affiliation fees and subscription growth for CBS All Access. Content licensing and distribution revenue soared 21% attributable to higher domestic and international licensing sales. The segment’s operating income declined 11% to $398 million.
Cable Networks’ revenue jumped 3% to $543 million primarily owing to rise in affiliate and subscription fees on account of growth of the Showtime digital streaming subscription offering. However, this was partly offset by the timing of international television licensing sales of Showtime original series. The segment’s operating income increased 9% to $248 million mainly due to growth in higher-margin revenues.
Publishing revenue of $161 million jumped 11% year over year primarily due to increase in print book sales and digital audio sales. Bestselling titles for the quarter included Unshakeable by Tony Robbins and A Man called Ove by Fredrik Backman. Operating income came in at $14 million, up from $13 million in the year-ago period, as higher revenue was offset by increased production and selling costs.
Local Media revenue fell 9% to $409 million due to the absence of Super Bowl 50 and an extra National Football League playoff game this quarter. However, growth in retransmission revenue benefited the segment to an extent. Operating income declined 18% to $123 million mainly owing to fall in revenue.
Other Financial Details
CBS Corp. ended the quarter with cash and cash equivalents of $163 million, long-term debt of $8,900 million and shareholders’ equity of $2,885 million. In the quarter, net cash flow provided by operating activities was $719 million and capital expenditures incurred were $27 million. The company generated free cash flow of $651 million. During the quarter under review, the company bought back 7.6 million shares for $500 million.
Bottom Line
In 2016, the company crossed $1 billion mark in revenues from retransmission consent and reverse compensation. In 2017, management anticipates retransmission and reverse compensation to increase 25% from the prior year. The company aims to achieve $2.5 billion of revenues from retransmission and reverse compensation by 2020. Affiliate and subscription fees are benefiting from CBS All Access and Showtime OTT.
The company had launched CBS and Showtime on Google's YouTube TV, and debuted Showtime on Sling TV. CBS and Showtime have been also launched on Hulu's new live TV service. CBS Corp. is also well poised to monetize from its content licensing and distribution.
Moreover, with the launch of Showtime's streaming service; online news channel, CBSN; and over-the-top service, CBS All Access, the company is generating incremental revenue. The company is also extending its Showtime brand, which is now available in Spain, Canada, Australia and several key European markets.
Management hinted that second-quarter total revenue for Local Media is pacing up mid-single digits. Further, the company informed that the second quarter will benefit from the broadcast of the NCAA Final Four games. The company’s over-the-top service is gaining traction and expects healthy subscriber growth as it gears to launch Twin Peaks on Showtime and Star Trek: Discovery on CBS All Access.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 7.5% due to these changes.
CBS Corporation Price and Consensus
CBS Corporation Price and Consensus | CBS Corporation Quote
VGM Scores
At this time, CBS' stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is suitable for growth investors and value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.