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Magic formula pick
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Strong buybacks, cheap!
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Viacom is a very profitable, consistently growing, wide moat company selling around 12x free cash flow. They’ve bought back shares at a compounded annual rate of 5% per yr for the past six years AND sport a 2% dividend. That’s a very shareholder friendly company. They have wonderful brands in Comedy Central (South Park thru 1016, Jon Stewart thru 2015, Colbert thru 2014), Nickelodeon (Spongebob, etc), and MTV, which always seems to be coming up with new highly controversial, (and profitable), programs that kids love to watch and their parents don't approve of.
Recs
Media Networks and Filmed Entertainment. Its Media Networks segment provides entertainment content for consumers in demographics attractive to advertisers, content distributors and retailers. Its Filmed Entertainment segment produces, finances and distributes motion pictures and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, MTV Films and Nickelodeon Movies brands. The Company’s media networks, MTV Networks and BET Networks, operate their program services, Websites and other digital media services in the United States and internationally.
*This company has great brand names that are very popular and that brings ad dollars.
*Ten year summary....constant revenue and income growth....... 6 billion in sales and 1.67 billion in EBIT in 2002, 15 billion in sales and 3.25 billion in EBIT in 2011.
*Key Ratios.......net margins over 12% on average.....ROE averaged over 17% last 9 years........
*Share buybacks over last 9 years........ from 787 to 558
*Earnings........estimates are about 15% for the next 2 years and 14% over the next 5 years
*Forward PE of less than 11 which would mean a earnings yield of over 9%.......ten year treasury gives you a yield of less than 2% and it also beat the S&P yield as a whole
Recs
TA 5/24/12. Hold 1 Year.
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analyst have strong estimates for next few years, so let's hold onto this.
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Redstone is buying out his daughter's 20% interest. Either there is a TO or private equity LBO play coming, or he is about to make another media industry play himself.
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Look for this company to rebound from recent losses. As people stay home due to energy pricing, entertainment will become king. This company has great earnings and has surprised on the upside twice recently. Look for that to continue going forward.
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people will be going for cheaper forms of intertainment with slowing ecomony. Show help this stocks short turn outlook
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I have chosen Disney to do well. If Disney does well, chances are that Viacom will too, since they target the same audience. MTV recently did some house cleaning, which is a good sign of freshness.
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What's not to like about MTV, Comedy Central, DreamWorks and Sponge-fuckin'-bob!? Plus, Redstone is smart & impatient people. This is ready to jump off the couch, folks!
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