It’s not uncommon to hear traders complain that there aren’t any bargains left on Wall Street. However, the skeptics really ought to consider media conglomerate ViacomCBS (NASDAQ:VIAC), as the data will show that VIAC stock is certainly not overpriced.
If anything, it’s a stock that deserves a re-rating to the upside. From a valuation perspective, contrarians should definitely have ViacomCBS on their watch lists.
Granted, there was some trepidation during the lead-up to ViacomCBS’s recent earnings release. Could the company deliver when there’s strong competition from streaming companies?
Actually, ViacomCBS beat the streaming upstarts at their own game with fiscal figures that surpassed expectation. Don’t dismiss this massive media conglomerate, as the revenues are still coming in and the subscriber count is growing fast.
VIAC Stock at a Glance
Before taking a position in VIAC stock, it’s important to remember what triggered its selloff earlier this year. Back in March, a year after the shock of the Covid-19 pandemic, ViacomCBS was recovering well. Suddenly, Archegos Capital unwound its massively leveraged position in ViacomCBS.
In hindsight, it’s evident this event wasn’t ViacomCBS’s fault. Nevertheless, the market punished VIAC stock, sending it from $100 to $40 in a matter of days.
It’s as if the market completely forgot that ViacomCBS is a thriving business with a well-established suite of entertainment brands. More than half a year after the Archegos blow-up, it seems investors still haven’t discovered ViacomCBS’s true value.
Now, VIAC stock is trading at the low price of $35 and change. Furthermore, ViacomCBS’s trailing 12-month price-to-earnings (P/E) ratio is just 7.21x.
Not only that, but the company offers a forward annual dividend yield of 2.73%. Hence, there’s something here to appeal to value investors as well as income seekers.
The Real Star of the Show
You might recognize ViacomCBS as the owner of Paramount Plus. Alternatively, you may know the company through its CBS television shows, or its broadcasts of National Football League (NFL) games, or its content like A Quiet Place Part II and Paw Patrol: The Movie.
Yet, there’s more to ViacomCBS than celebrities and traditional TV fare. As the data demonstrates, the company is also evolving into a streaming-niche contender. This is important, as today’s audiences are turning to streaming content for their entertainment.
Fortunately, ViacomCBS is thriving in this area. During the third quarter of 2021, the company added a whopping 4.3 million global streaming subscribers. Clearly, ViacomCBS’s streaming-segment growth is the star of the show now.
With the third-quarter addition, ViacomCBS’s total global streaming subscriber count came to nearly 47 million. So, if more viewers are choosing to “cut the cord” on traditional cable and paid TV services, investors have nothing to worry about — ViacomCBS can adapt and evolve.
The Streaming Strategy Is Working
It’s also notable that ViacomCBS’s streaming revenue increased by 62% year-over-year to around $1.1 billion. In other words, the company is able to convert its subscriber growth into enhanced revenues.
At the same time, let’s not ignore ViacomCBS’s third-quarter TV entertainment revenue. It totaled $2.92 billion, marking a 24.2% improvement. Thus, the skeptics can’t claim ViacomCBS is leaning too heavily on its streaming segment.
Now, let’s take a look at the big picture. For the third quarter, ViacomCBS’s revenue amounted to $6.61 billion. That’s an increase of 13.2%, and it’s also better than the FactSet consensus estimate of $6.56 billion.
With that data undoubtedly in mind, ViacomCBS CEO Bob Bakish took a moment to tout his company’s progress. “Our strategy is clearly working and we’ll continue to use the power of global content, distribution and market expansion to drive scale,” Bakish explained.
The Takeaway on VIAC Stock
VIAC stock still appears to be undervalued, even more than a half-year after the Archegos Capital incident. This presents an opportunity for value-focused investors.
The company’s revenue data should impress even the staunchest critics. Besides, ViacomCBS is still generating powerful income streams from both its TV entertainment and streaming content segments.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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