Updated Research Report on CBS Corp. - Analyst Blog

On Mar 5, 2014, we issued an updated research report on CBS Corporation CBS. Ever since CBS posted better-than-expected fourth-quarter 2013 results (on Feb 12), the Zacks Consensus Estimate has been trending upward. The company has exhibited a bullish run throughout 2013. Moreover, the stock has garnered a return of nearly 9.2% since the earnings release.

The company's fourth-quarter top and bottom lines handily surpassed the Zacks Consensus Estimate while rising nearly 6% and 22% year over year. CBS Corp. highly benefited from content monetization. Moreover, the company has beaten the Zacks Consensus Estimate in the trailing four quarters by an average of 5.2%.

Given the strong run, for 2014, the Zacks Consensus Estimate moved up to $3.48 from $3.44 and for 2015, it has risen to $4.02 from $3.96, over the last 30 days.

CBS Corp. continues to focus on content monetization as well as streaming deals. The company has entered into several long-term streaming deals for CW content with Netflix, Inc. NFLX, HULU and Amazon.com Inc. AMZN among others to put its programming (Under The Dome and Extant for Amazon, Elementary and Blue Bloods for HULU) on a diverse range of platforms and thereby generate steady revenues.

Further, CBS Corp. is active in adding other diverse revenue streams to hedge against economic cycles. For example, it is constantly expanding in the fast growing live gaming and eSports market. Notably, the company's non-advertising revenues contributed 42% to the total revenue in 2013, which was the highest to date.

Additionally, CBS Corp. remains an asset for yield-seeking investors. In 2013, CBS repurchased 545.8 million shares at a cost of $2.2 billion. The company also announced a $1.5 billion accelerated share repurchase program (to be executed using proceeds from Outdoors IPO).

It expects to buy back $2 billion worth of shares in the first quarter of 2014, with the remaining $500 million coming from the existing share repurchase authorization. The existing share buyback authorization stands at an impressive $6 billion.

However, advertising continues to be a major source of revenues in spite of diversification, which poses a concern. Apart from this, CBS Corp. operates in a highly competitive media market with other major players and this is a challenge as well.

Currently, CBS Corp. carries a Zacks Rank #3 (Hold).

Key Picks from the Sector

Another stock worth considering in the media sector is The Walt Disney Company DIS with a Zacks Rank #2 (Buy).