CBS Q3 Earnings: Is CBS Cheap at 4.7x Price/EPS?

in EARNINGS/INVESTING IDEAS by

CBS Corporation (NYSE:CBS) is scheduled to report Q3 earnings results on November 12, 2019. The company is expected to report earnings of $0.91/share on revenue of $3.358 billion. The consensus earnings per share (EPS) of $0.91/share is based on a poll of 23 analysts and represents a decline of -26.6% over the same quarter last year when the company reported earnings of $1.24/share.

The revenue forecast of $3.358 billion based on a poll of 21 analysts implies a year-over-year (YoY) growth of 2.9%. Last year the company reported $3.263 billion in revenue for the quarter.

Expected to report EPS decline of -$0.33/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $3,358.00 $3,263.00 2.9%
EPS $0.91 $1.24 -26.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters. What are your expectations from CBS for this earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2019 $1.12 $1.16 3.6% Beat
Q1, 2019 $1.35 $1.37 1.3% Beat
Q4, 2018 $1.53 $1.50 -2.0% Missed
Q3, 2018 $1.21 $1.24 2.5% Beat
Q2, 2018 $1.10 $1.12 1.8% Beat
Q1, 2018 $1.18 $1.34 13.6% Beat
Q4, 2017 $1.14 $1.15 0.9% Beat
Q3, 2017 $1.07 $1.04 -2.8% Missed

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to CBS’s stock price performance? It’s more important for some companies than for others. In the following table, we summarize the company’s stock price movements after earnings releases.

The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-08 $49.18 $48.91 -0.5% Decline
2019-05-02 $51.13 $49.73 -2.7% Decline
2019-02-14 $48.43 $50.64 4.6% Increase
2018-11-01 $57.35 $56.17 -2.1% Decline

Fundamentals And Technical Analysis

CBS is currently trading at $39.18/share, up 2.8% for the day. The company is trading at approximately 65.8% of its 52 week high of $59.56/share. The company’s stock price is down -20.3% since the last earnings report and up 3.7% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 51.38 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 4.7x and a forward P/E multiple of 7.6x. CBS’s current share price also implies a price-to-book (P/B) multiple of 3.0x. The following table summarizes some other key fundamental ratios:

Data as of November 11, 2019
Metric Value
Last Fiscal Period FY2019.Q2
Period End Date June 30, 2019
Stock Price (Current) $39.18
P/E Ratio 4.7x
P/E Ratio (Fwd) 7.6x
PEG Ratio 1.0
Total Debt to Capital (%) 41.9%
Levered Free Cash Flow $534.0 million
Enterprise Value / EBITDA 7.9x

Company Profile: CBS Corporation

CBS Corporation is a large-cap stock with a market capitalization of $14.373 billion and a total enterprise value of $24.532 billion. The company operates in the Communication Services sector and Media industry. CBS Corporation operates as a mass media company worldwide.

The company operates in four segments: Entertainment, Cable Networks, Publishing, and Local Media.

The Entertainment segment distributes a schedule of news and public affairs broadcasts, and sports and entertainment programming; produces, acquires, and/or distributes programming, including series, specials, news, and public affairs; operates online content networks for information and entertainment; produces theatrical films; and digital streaming services. This segment also operates CBS Sports Network, a 24-hour cable program service that provides college sports and related content.

The Cable Networks segment offers subscription program services, such as original series, theatrical feature films, documentaries, boxing and other sports-related programming, and special events, as well as a direct-to-consumer digital streaming subscription. This segment also operates Smithsonian Networks, which operates a channel featuring cultural, historical, scientific, and educational programs.

The Publishing segment publishes and distributes adult and children’s consumer books in printed, digital, and audio formats; develops special imprints and publishes titles based on the products of the company, as well as that of third parties; and distributes products for other publishers. This segment also delivers content; and promotes its products on its Websites, social media, and general Internet sites, as well as those related to individual titles.

The Local Media segment owns 29 broadcast television stations; and operates local Websites, including content from its television stations.

The company was founded in 1986 and is headquartered in New York, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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