CBS Earnings Preview: Falling Expectations?

, which faces the retirement of late-night icon David Letterman in 2015, is scheduled to report its first-quarter results Thursday, May 8, after the markets close. Investors no doubt would like to see another record quarter like the previous one.

was spun off from the company during the first quarter, and there is the accelerated share repurchase announced in the previous report.

Analysts on average predict that CBS will report that its revenue for the quarter decreased year-over-year from $4.0 billion to $3.9 billion. Earnings of $0.75 per share are also in the consensus forecast. That would be a rise from a reported profit of $0.73 per share in the comparable period of last year. Note that the consensus earnings per share (EPS) estimate has ticked down by a penny over the past 60 days. However, the company has not fallen short of analysts' EPS expectations in the past four quarters. The beat in the fourth quarter was by two cents per share, or less than three percent. CBS attributed its highest-ever fourth-quarter and full-year results in part to the increasing role of non-advertising revenue streams, such as syndication and digital streaming deals and reverse compensation. The share price rose more than seven percent in the days following the fourth-quarter report. Looking ahead, the EPS forecasts currently call for double-digit percentage growth in both the current quarter and the current year. Those consensus EPS estimate have also slipped a bit in the past 60 days, however. Revenue for the current quarter so far is projected to have dropped to $3.8 billion.

CBS is a global mass media company. Its operating segments include: Entertainment, which produces and distributes programming, Cable Networks, which owns and operates multiplexed channels, Publishing, which produces consumer books, and Local Broadcasting, which owns TV and radio stations. CBS Corporation was founded in 1986, and its headquarters are in New York City. It is a component of the S&P 500, and it now has a market capitalization of less than $19 billion. Leslie Moonves has been the president and chief executive officer since January 2006. Sumner Redstone is executive chairman. Competitors include

and Twenty-First Century Fox. The former just posted better-than-expected fiscal quarter results on growth in all business segments. The forecast for the latter includes essentially flat earnings and a double-digit revenue decline. During the three months that ended in March, CBS expanded its licensing deal with Hulu, announced a $1.5 billion stock buyback program, promoted a new chair of CBS Entertainment and renewed its hit "The Big Bang Theory" for three years. Also, CBS Outdoor Americas began trading publicly.

CBS has a long-term earnings per share growth forecast of more than 15 percent, but its price-to-earnings (P/E) ratio that is greater than the industry average. Its operating margin also is greater than the industry average, and it has a return on equity of more than 19 percent. Its dividend yield is about 0.8 percent. The number of CBS shares sold short, as of the most recent settlement date, represented more than two percent of the total float. That is the second lowest level of short interest so far this year. At the current average daily volume, it would take less than two days to close out all of the short positions. Nine of the 29 analysts surveyed by Thomson/First Call who follow the stock rate it at Strong Buy, and another 14 also recommend buying shares. A move to the only price target listed would represent a gain of nearly 10 percent for shareholders. But that price target is less than the 52-week high. At the time of this writing, shares had pulled back less than 14 percent in the past two months. The share price is below the 50-day and 200-day moving averages. Over the past six months, the stock has underperformed Disney and the broader markets but narrowly outperformed Twenty-First Century Fox.

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