Is this media icon a buy?

It’s time to explore a media icon. Here is the break down of $VIAC, other wise known as ViacomCBS.

Current Price: $42.87

52/Wk High: $101.97

52/Wk Low: $21.67

Market Cap: $26.0 Billion

Dividend: $0.24 / 2.17% Yield

Read below for the break down!

ViacomCBS ($VIAC) is a leading global media company that creates and distributes digital content to audiences around the world through a variety of media outlets.

Networks under the ownership of ViacomCBS include Showtime Networks, Nickelodeon, CBS, Comedy Central, MTV, BET, Pluto TV, TV Land, and more.

ViacomCBS is led by CEO and President Robert Bakish. Bakish joined the company as CEO and President in 2019, now leading a management team with prior experience from the likes of Townsquare Media, NBCUniversal, and Amazon.

Sifting through the ViacomCBS stock price, 59.4% is based on the company’s Cable Networks segment according to TREFIS (@trefis) data.

Furthermore, 36.7% is based on the TV Entertainment segment, 4% Filmed Entertainment, and 31.1% Net Debt.

Of late, ViacomCBS stock has lacked upside performance, remaining mostly flat since the notorious Archegos Capital Management fiasco that unraveled not only a bevy of leveraged bull-side bets but the stock itself.

Digging into the numbers, ViacomCBS beat Q1 2021 expectations with an EPS of $1.52, better than the analysts EPS consensus estimate of $1.22. On a year-over-year basis, EPS improved by 34.51%.

Revenues improved as well, with Q1 2021 revenues totaling $7.412 billion, representing a strong 14% increase on a year-over-year basis. For reference, the Q1 2020 revenues level was $6.499 billion.

Breaking down revenues, the company’s Advertising segment turned out $2.681 billion in Q1, representing an impressive 21% improvement year-over-year.

Furthermore, the Affiliate segment delivered $2.075 billion in revenues, representing a smaller 5% improvement, while the Streaming segment delivered $816 million in revenues, representing a 65% advance.

Rounding out revenues, the Theatrical segment provided $1 million in revenues, representing a 99% decline, while the Licensing and Other segment furnished $1.839 billion in revenues, representing an 11% boost.

Do note that Theatrical revenues were “immaterial” according to management due to the lasting effects of the COVID-19 pandemic.

Exploring one of the most important segments, the Streaming segment experienced significant improvements. In fact, ViacomCBS turned out 69% growth in streaming subscription revenues and 62% expansion in streaming advertising revenues.

Shifting into income, operating income improved to a strong $1.528 billion, representing a whopping 69% jump in operating income compared to the prior year.

On the net earnings front, ViacomCBS turned out $899 million in net earnings from continuing operations, representing a sizable 79% improvement in net earnings.

Cash flows improved as well, with GAAP operating cash flow increasing by 362% to a significantly better $1.651 billion. Rounding out cash flows, free cash flow (non-GAAP) increased by 419% year-over-year to $1.589 billion.

Leadership was upbeat.

“In Q1, we accelerated our expansion in streaming with the launch of Paramount+ further enhancing ViacomCBS’ ecosystem of premium, pay and free services,” Bakish said.

Shifting into the balance sheet the numbers are solid.

Total Debt: $17.787 Billion

Total Liabilities: $35.602 Billion

Total Assets: $54.773 Billion

Cash & Short Term Inv: $5.499 Billion

On a valuation basis, ViacomCBS does trade at a premium.

Price to Earnings: 9.91x

Forward Price to Earnings: 10.52x

Price to Sales: 1.09x

Price to Book: 1.39x

Price to Cash Flow: 6.96x

Management has been effective.

Return on Equity: 16.52%

Return on Assets: 5.82%

Return on Invested Capital: 7.08%

Given the numbers the analysts are bullish with over twelve upgrades since late March and a mean price target of $48.86/share, representing a 13.97% upside.

The high price target is $80.00/share, representing an 86.61% gain, while the low price target is $33.00/share, representing a -23.02% downside.

The big money is quite involved with 67.17% of ViacomCBS being owned by institutions. Top holders include The Vanguard Group, State Street Global Advisors, and BlackRock Institutional Trust.

On a technical basis ViacomCBS could be presenting opportunity. According to the six-month charts the MACD is moving with slim upside momentum within a tight range around 0.4097.

The six-month charts are also indicating an RSI of 50.11 and CCI of 21.42, both of which are on the lower end.

Investors fear tough competition against the streaming giants such as Disney and Netflix, while the bulls believe ViacomCBS is undervalued and can continue to expand into streaming.

In short, ViacomCBS ($VIAC) is a solid company with a sturdy balance sheet, expanding revenues, growing customer base, reliable management team, slim valuation, and bevy of appreciated content.

EAT - SLEEP - PROFIT

Disclaimer: This is not direct financial advice, simply an opinion based on independent research.