CBS Q3 Earnings: What To Watch For
CBS Corporation (NYSE:CBS) is scheduled to announce its third quarter results on Thursday, November 2. The company reported better-than-expected fiscal second quarter results, as its earnings and revenue came in ahead of analysts’ expectations. In Q2, the company’s revenue increased 9% year-over-year (y-o-y) to $3.3 billion, primarily due to growth across segments. In addition, CBS reported operating income of $669 million, up 3% y-o-y, driven by growth in affiliate and subscription fee revenues.
Our $67 price estimate for CBS’ stock is slightly below the current market price.
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CBS also posted adjusted earnings of $1.04, up 12% y-o-y in the last quarter. Going forward, we expect the company to carry forward its growth momentum. However, the viewership for national telecasts of NFL games was down 11% this season (September) compared to 2016, according to Nielsen. As a result, we expect CBS to see softer ratings due to decline in NFL’s viewership. This could further hurt the company’s advertising revenues, which could, in turn, impact the company’s top line in the third quarter. To add to that, the company’s advertising revenues may also see difficult comparisons to strong political advertising in Q3 2016.
In Q3, CBS expects the Local Media segment revenue to pace up to low-single digits. Also, the company’s Cable Networks segment is expected to benefit from the Floyd Mayweather – Conor McGregor pay-per-view boxing event in Q3. The media company also expects healthy growth in OTT subscribers on the recently launched Twin Peaks on Showtime and Star Trek: Discovery on CBS All Access.
Reuters’ compiled analyst estimates forecast revenues of $3.3 billion and earnings of $1.09 per share for the third quarter. CBS also expects to retire more than $1 billion worth of stock during the second half of 2017, including additional share repurchases in Q3 and the Radio exchange offer in Q4. On the CBS Radio and Entercom merger, the deal is expected to close later this year. The company is in the process of obtaining the necessary regulatory approvals.
See our complete analysis for CBS Corporation
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