Viacom 4Q17 Earnings OK, Weak Near-Term Guide Offset By Turnaround Progress
Media and entertainment producer Viacom (NYSE:VIAB) reported mixed results for 4Q17 as domestic affiliate fees remain weaker than expected. Looking to 2018 and beyond, the new management guided toward weaker near-term revenues in the U.S. but provided encouraging signs that the overall turnaround is making progress. International revenues and profits continue to improve, and Paramount could become profitable in 2018. Stability under new CEO Bob Bakish and the ownership structure is working. At 7.6x forward EV/EBITDA with improving fundamentals, strong cash flow and a strong balance sheet, Viacom shares could be poised for a stronger 2018.Large Cap Media
Identify & Profit from Distressed Investing
Turnaround Investing Blog
At first glance, the shares have decent appeal as a turnaround investment. Looking deeper, however, the fundamentals are not as strong and stable as they appear. Surplus cash flow is tight, a key driver is weakening, it is increasingly reliant on China and has other nagging issues. We don’t see the new CEO as a catalyst for change. Despite the “first glance appeal”, Tupperware isn’t a good fit as a turnaround stock.
Comparing Stocks Vs. Bonds
While the common stock of a turnaround candidate usually has the greatest upside potential, other classes of securities, such as bonds or preferred stock, may offer attractive profit possibilities with less risk. Many turnaround companies have only one class of securities available to investors but where there are different classes to choose from, it can pay to do a little extra analysis of the various options.
Turnaround Letter Stock Pick Named Top Performer of 2017
What Last Year's Top Stock Pickers Are Buying in 2018
This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.
George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."
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