CBS Corporation (NYSE:CBS) has been a big winner since early 2009 — but so have most stocks throughout the broader market. For those wondering whether CBS Corporation (NYSE:CBS) can continue its upward trajectory, the past month has been less than inspiring.
The good news is that CBS Corporation (NYSE:CBS) has continued to grow earnings. Since an atrocious 2008, when diluted EPS came in at -$17.43, earnings have steadily increased on an annual basis. The past four years have all been profitable, and diluted 2012 EPS came in at $2.39. The bad news is that CBS Corporation (NYSE:CBS) suffered a revenue decline in 2012.
Does this indicate a change in CBS’s overall fortunes? If you look at the last several quarters, the answer to that question would be no. Revenue has grown modestly but steadily on a quarterly basis; the company’s first-quarter revenue increased 6.40% year over year. In addition to increasing subscription revenue, CBS Corporation (NYSE:CBS) has enjoyed:
- Strong content demand
- Consistent syndication sales
- Reverse compensation from affiliate
Wheeling and dealing
CBS Corporation (NYSE:CBS) was in danger of losing NFL broadcasting rights this year, but it extended its contract through 2022. The importance of this deal shouldn’t be overlooked, since the NFL is consistently the most viewed program or event on television on an annual basis. CBS also recently acquired the remaining 50% stake for TV Guide Digital, which includes TVGuide.com.
Other important deals include agreements with Hulu, Amazon.com, Inc. (NASDAQ:AMZN), and Netflix, Inc. (NASDAQ:NFLX). Netflix, Inc. (NASDAQ:NFLX), Amazon.com, Inc. (NASDAQ:AMZN), and Hulu are no strangers to growth, which is a big plus for CBS. These deals will increase content availability for Netflix, Amazon.com, Inc. (NASDAQ:AMZN) Prime Instant Video and Hulu. Therefore, all parties are likely to remain happy. That’s always the best kind of deal. Through all streaming video deals, CBS is seeing double-digit growth. Not bad!
What does Nielsen say?
The popularity of CBS television shows is important. The more viewers a show attracts, the more revenue CBS can accumulate through advertising. Let’s see how well CBS is doing in this area.
Below are the Nielsen 2012-2013 Season Network Primetime Series Rankings. CBS cracked this list nine times:
No. 2 The Big Bang Theory
No. 9 Two and a Half Men
No. 11 NCIS
No. 14 Two Broke Girls
No. 18 Survivor: Philippines
No. 20 NCIS: Los Angeles
No. 21 Person of Interest
No. 22 Criminal Minds
No. 25 Mike & Molly
CBS also cracked the Top 10 Total Viewers list five times:
No. 1 NCIS
No. 3 Big Bang Theory
No. 4 NCIS: Los Angeles
No. 5 Person of Interest
No. 10 Two and a Half Men
CBS has a knack for finding creative talent. That being the case, CBS should continue to deliver top-tier programs that draw wide audiences.
Is CBS the best option?
Despite its successful deal-making and popularity, CBS might not be the best option in the space.
From a valuation standpoint, CBS is trading cheaper than News Corp (NASDAQ:NWS) and The Walt Disney Company (NYSE:DIS)
CBS Forward PE Ratio data by YCharts
Cheap might be appealing, but CBS is also the most sensitive of these companies to slowdowns in advertising. During the financial crisis of 2008/2009, when ad sales shriveled, the stock fell like a rock in a bottomless pit. News Corp (NASDAQ:NWS) held up a little better, but The Walt Disney Company (NYSE:DIS) held up best.
