Viacom, Inc. Earnings: Steady as She Goes

By Markets Fool.com

Shares of Viacomstock were up slightly by early Thursday afternoon after the media giant reported quarterly results that were steady, if not spectacular. While Viacom did not top all analyst expectations, it did report a terrific profit and grew revenue. Here's a look at Viacom's first quarter.

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Viacom: EPS and revenue growth
One of the most important takeaways from any quarterly release is earnings and revenue growth on a year-over-year basis. In both areas, Viacom delivered. Here is a quick look at the year-over-year highlights:

  • Viacom's adjusted diluted EPS came in at $1.29, an 8% spike year over year.
  • Top-line revenues rose 5% on a year-over-year basis, totaling $3.34 billion.

CEOPhilippe Dauman commented on the quarter:

Viacom's focus on developing popular franchiseproperties and constantly expanding our growing international presence drove solid top-line results and record earnings per sharethis quarter. We continued to deliver increased revenues in our media networks operations driven by steady growth in affiliaterevenues, and also benefited from Paramount Pictures' Oscar-nominated Interstellar and our very successful companywidefranchise, Teenage Mutant Ninja Turtles.

Viacom's quarterly EPS was an all-time company record, but it wasn't all rosy. Adjusted operating income for the Media Networks unit declined 1% year over year on higher programming costs. That said, after a year of flat earnings, the past two quarters have been very solid for Viacom. In addition to this quarter's solid results, Viacom's previous quarter saw revenue growth of9% and EPS growth of 10%. Its results seem to be trending upward.

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The investor's view
Naturally, some investors will be concerned that Viacom's revenue missed analyst expectations of $3.41 billion. But actual revenue was still up substantially, to an impressive $3.34 billion, andit's best to not factor analysts' guesses into your analysis. Analysts are wrong about half of the time, so a miss for any company really isn't uncommon or significant unless the businesses fundamentals are declining. What's more important is that Viacom grew both sales and earnings year over year.

Viacom owns a sprawling portfolio of media brands, from Comedy Central to Paramount, which provides safety through diversification but is also a drag on growth. For instance, while earnings and revenue came in strong for this quarter, they were driven largely by the success of Interstellar and Teenage Mutant Ninja Turtles. In the future, a few flops at the box office could swing results in the other direction. For a company of this size, it's almost impossible for everything to be going right all of the time.

Still, the company has strong brands and is delivering value to investors. For the quarter, Viacom returned $887 million to shareholders through dividends and share repurchases. The dividend remains unchanged, yielding 1.9%, but Viacom is plowing money back into its share repurchases. It doubled its record buyback plan in 2013, to authorize a staggering $20 billion in repurchases. Viacom continues to up the ante of its impressive buyback plan, which makes sense considering shares trade at a relatively cheap P/E multiple of 12. When you consider that the company is delivering record profits and high returns on capital, while also returning considerable capital to shareholders, investors should be happy.

The article Viacom, Inc. Earnings: Steady as She Goes originally appeared on Fool.com.

Adem Tahiri has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.