Are there bargains to be had in the stock market these days? Analyst David Miller at SMH Capital (Sanders Morris Harris) is telling clients that CBS Corporation is one of them. Yes, the WGA strike is having an impact on revenues, so Miller has lowered his expectations for Q4 when CBS reports its numbers next month, reducing TV-related revenues by 142.3 million and EBITDA by 71.1 million. But he also notes that CBS has been buying back lots of its own stock, so he’s reduced his model of the number of shares outstanding to 675 million and comes up with no change in his previous estimate that the company will have 53 cents of earnings per share for the quarter.
“The WGA strike has extended three weeks beyond our projection, and with CBS easily the most exposed, we are recalibrating our 2008 estimates to account for less scripted programming, though more reality programming and more one-off ‘specials,’ which command a lower CPM for advertisers but are far less expensive to produce,” Miller said in a research report. So, his 2008 revenue projection drops to 14.4 billion from 14.6 billion and his EBITDA projection to 3.27 billion from 3.34 billion.
Noting how much CBS’ stock price has fallen in recent months, Miller calls the stock “a screaming bargain” which explains why CBS has been so aggressive in buying its own shares and why the analyst thinks investors should as well.