Sunday, February 17, 2013

"NBC-Universal is now off the table so it is time to take a look at CBS and Viacom from the media content smorgasbord"

Dow Jones Industrial Average 13981.76 (Down) Week ending 02-15-2013

Comcast bought up the other 50% of NBC Universal
that they didn't already own in a week with lots of 
M & A activity, including Warren Buffet and 
Berkshire Hathaway along with 3G Company 
acquiring H.J. Heinz Company. So I decided to take
a look at a few of the other interesting media and TV
content companies that might be possible targets for
buyout, but that also met my Return on Equity and 
PEG Ratio measures for excellent fundamental
stocks. These are the two.

CBS Corp. CL B (Symbol CBS, $44.64)
has a Return on Equity of 15.57% and a PEG ratio of 
1.09. The current dividend yield on the stock is 1.08% 
and the current PE is 14.98. 

CBS currently has a large collection of popular TV shows including,
NCIS, The David Letterman Show, and the Big Bang Theory. The 2013 earnings 
are per share of $2.97 and CBS is projecting 2014 earnings of $3.37 per share. 

Revenues for 2013 look to be about $14.52 
billion dollars and for 2014 it is looking like $15.39 
billion dollars. Gross  Profit Margins quarterly are
 running 46.14% (according to Y-Charts).

The one year total return on the stock has been 
50.86% and for 3 years the Total Return has 
been 230.77% , so it has been a been a big time 
winner. I like this one the best of the two stocks 

Viacom Inc. CL A. (Symbol VIA, $62.15) 
has a Return on Equity of 29.53% and a PEG Ratio of 0.91. 
The good news at Viacom is that the company is becoming  ever more 
profitable and they have very diverse programming`that match up well
 with the changing demographics of North America. The bad news at
Viacom is that the revenues per quarter continue to decline which is
not a great sign. Sumner Murray Redstone the media magnate is now 89, and owns a majority of the stock in Viacom. 

Sumner does not want to sell his stock, but eventually he will need to retire. The stock pays a dividend yield of 1.77% and has a PE of 12.66. 

VIA is projecting 2013 earnings per share of $4.70 and 2014 earnings per share of $5.40. The company has 5 year Earnings growth of 16.85%. Revenue is $13.89 per year but has been declining over the last few years.

The company currently has 19 Strong Buy recommendations and 1 Overweight. Also the stock has already been successful and has a One year Total return of 13.43% and a 3 Year Total Return of 102%. 

CBS seems like the more logical pick as an immediate purchase with Viacom being more of a long term accumulate. But both stocks are viable picks.

So put a little "Big Bang Theory" in your portfolio, and add another diversified investment with CBS this week. 



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