A Closer Look At Viacom’s Valuation

by Trefis Team
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Viacom (NYSE: VIA) is one of the least diversified major media conglomerates and relies heavily on its flagship media networks, which include Nickelodeon, Comedy Central, MTV, and VH1, among others. Almost 80% of the company’s revenue comes from the Media Networks segment, of which Nickelodeon and MTV particularly benefit from strong brands. We have summarized our forecasts for Viacom’s fundamental value in an interactive model based on the expected calendar year (CY) 2018 results. You can modify assumptions such as changes in expected segment revenue or EBITDA margins to see how they impact the company’s value. The model shows the key steps in identifying Viacom’s valuation sensitivity to changes in its segment revenues. We detail how changes in revenue or segment EBITDA margin impacts total EBITDA, which then impacts enterprise value (assuming a constant EBITDA multiple).

We expect Viacom to generate over $13 billion in revenues in CY 2018, and earnings of about $1.8 billion. Our revenue forecast of about $13.3 billion represents year-over-year growth of 2%. Of the total expected revenues in 2018, we estimate $10.1 billion from the Cable Networks business and over $3 billion from Paramount Films. Viacom’s stock price has fluctuated between $31 and $39 since the beginning of 2018. We have maintained our long-term price estimate for the company at $34, which is slightly lower than the current market price. Our forecasts for the company are summarized in our interactive dashboard. If you have a different view, you can modify various inputs to see how updated inputs impact the company’s valuation and share links to scenarios created on our platform.

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