A lot has been said about the mass migration from traditional, packaged cable TV services to ala carte, stand-alone services like HBO Go and Netflix (NFLX – Analyst Report). Big cable and other large media companies are scrambling to make up for the lost revenue. It seems like the is just the beginning of a large change in consumer behavior. I’ve talked about it in the past in my light-hearted infotainment Trending Stocks videos.
While this distruption in media is great for the new content providers, it’s tough on the old guard like today’s Bear of the Day Viacom (VIAB – Analyst Report). Viacom creates television programs, motion pictures, games, and other entertainment content. It operates through two segments, media networks and filmed entertainment. It’s the media network side of the business that has come under fire in recent years. Viacom operates several popular cable channels including Nickelodeon, Comedy Central, MTV, VH1, Spike,BET, CMT, TV Land, Nick at Nite and Nick Jr.
A rash of negative earnings estimate revisions saw our Zacks Consensus Estimates tumble. Over the last sixty days, fifteen analysts have dropped their current year estimate while seventeen have done so for next year. The bearish attitude has brought the current year consensus from $5.83 to $5.26 and dropped next year’s number from $6.26 all the way down to $5.53.
The bearish attitude has hit the stock price very hard over the year and a half. After trading near $78 to close out 2014, VIAB shares had a rough 2015, seeing shares drop all the way down to $36.32 in August. This year hasn’t been much better. Shares plummeting after a small January rally, dipping to a fresh low under $30 before a furious February rally has shares back to $40. With the stock approaching the 50-day moving average and the commodity channel index heavily overbought right here, it looks like the rally may be coming to an end.
If you’re looking for another media company to check out, Walt Disney (DIS – Analyst Report) is a Zacks Rank #2 (Buy) in the same industry. The media conglomerate industry is in the Bottom 19% of our Zacks Industry Rank.
Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at Zacks.com. David Bartosiak is the Momentum Stock Strategist with Zacks, editor of the Momentum Trader and Home Run Investor, and host of “Trending Stocks”