Bear Of The Day: Viacom

A new era of freedom is coming. The "cord-cutting" revolution is upon us. One day, in the very near future, we’ll be able to subscribe to the channels we want to subscribe to and not get tossed into a package deal with the Oprah Winfrey Network or Lifetime TV. No I don’t want to watch HGTV (okay, so secretly I can’t get enough of it.) The big cable companies are suffering because of it. Over a 2 day period last week, the largest 5 media companies lost $65 billion in market value. After leading the market out of the 2009 hole, they were giving up ground rapidly.

So today’s Bear of the Day is going to have to find a way to make it through this new era and get back to positive earnings estimates over the next few quarters. That Bear of the Day is Viacom (VIAB - Analyst Report). I’m not here to try and pile it on for a stock that’s sold off from nearly $70 to the mid $40s, but there have been some alarming trends over the last few months.

In the last week, 6 analysts have revised their estimates down for the current quarter, while 8 have done so for the current year and next year. This bearish outlook has dropped the Zacks Consensus Estimate for the current quarter from $1.97 to $1.71. The carnage is even worse for next year, where the consensus has dropped from $6.60 to $6.30. That’s nearly a 5% downward revision and a big reason for the unfavorable Zacks Rank.

As for the stock, finding support along the way down has been nearly impossible for VIAB. The last time shares traded this low was 2012. Since then a huge rally pushed the stock to the high $80s before the downward revisions began to wreak havoc. The selling accelerated on the heels of its last earnings report. Now the stock is struggling to find buyers in the mid $40s.

Investors looking for other media conglomerates to buy may want to look at a different industry. That industry currently sits in the Bottom 8% of the 265 industries we rank with our Zacks Industry Rank. But if you want an idea in the broadcast radio/TV industry you can investigate Zacks Rank #1 (Strong Buy) Salem Communications (SALM - Snapshot Report) or Zacks Rank #2 (Buy) Entercom Communitication (ETM - Snapshot Report).