What To Expect From CBS’s Q4 Earnings

CBS Corporation (NYSE:CBS) is scheduled to announce its fourth quarter results on Wednesday, February 15. The company’s third quarter results were above consensus estimates, led primarily by domestic cable licensing. In Q3 2016, CBS showed growth in profits and revenues across all segments, as the company’s overall revenue increased 4% year-over-year (y-0-y) to $3.4 billion. Also during the quarter, CBS separated out its radio business from its local broadcasting, since for several years radio had been a drag on CBS’s results due to growing competition from satellite radio and streaming services. The company’s adjusted earnings per share grew by 19% y-o-y to $1.05 in the third quarter, marking an all-time high. Going forward, CBS expects to carry forward its growth momentum in the fourth quarter of 2016 as well, driven by strong third quarter results, the Presidential elections and healthy gains in the upfront pricing markets.

CBS is seeing solid growth in scatter ad pricing, which could further add to its ad revenue growth in the fourth quarter. In addition, CBS’s cable networks (Showtime Networks, CBS Sports Network and Smithsonian Networks) continue to post steady subscription growth. It should be noted that CBS’ Showtime is one of the popular cable networks that has been able to post subscriber growth despite the increased cord-cutting of late amid growth of alternative video platforms. Showtime has over 23 million pay-TV subscribers. The company expects its Showtime subscribers to grow further with new seasons of The Affair, Homeland and Billions. CBS owns more than 80% of its Showtime and CBS lineups. In addition, CBS continues to license its entire Showtime brand internationally, following deals in Canada, Australia, and several key European markets.

Q4 Guidance

Reuters’ compiled analyst estimates forecast revenues of $3.97 billion and earnings per share of $ 1.10 in Q4 2016, implying growth of about 2% and 20%, respectively. Historically, CBS’s fourth quarter has been its strongest quarter which includes the holiday season. Therefore, we expect the company to carry forward its growth momentum in the fourth quarter as well, driven by strong third quarter results and healthy gains in the upfront pricing markets.

See our complete analysis for CBS Corporation 

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