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Time Warner Records New High

Zacks Equity Research

Time Warner Inc.’s (TWX) strategic initiatives and an upbeat guidance facilitated it to record a new 52-week high of $58.02 on Thursday, Mar 28.  

Shares of this media and entertainment company eventually closed at $57.62, recording a healthy return of 15.8% year to date. The company currently trades at a forward P/E of 15.67x, almost at par with the peer group average of 15.69x.

Alongside, one of the company’s peers, Lions Gate (LGF), reached a new 52-week high of $24.15 on Thursday, Mar 28.  

Time Warner has been expanding its digital presence, enabling consumers to enjoy its content through numerous platforms and devices. Alongside, it has entered into content distribution deals with companies like Time Warner Cable Inc. (TWC) and Netflix, Inc. (NFLX).

Meanwhile, Warner Bros. became the first movie studio to offer video on demand, and acquired Flixster, a movie search application on smartphones and mobile devices.

The company also launched a digital movie technology, UltraViolet, through which consumers have the choice to watch movies on their preferred Internet-connected devices. The device is available in the U.S., Canada and the U.K., and now the company plans to launch the technology in Australia, France, Germany, Ireland and New Zealand.

Time Warner has been actively managing its cash flows returning much of its free cash to shareholders via dividend and share repurchases. During the last reported quarter, the company generated free cash flow of $990 million.

Time Warner hiked its quarterly dividend by 11% to 28.75 cents a share and announced a new share buyback plan of $4 billion. From Jan 1, 2012 through Feb 1, 2013, Time Warner bought back 84 million shares, aggregating $3.5 billion.

Going forward, this Zacks Rank #3 (Hold) stock projects low double-digit growth rate in earnings per share for 2013.

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