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Viacom Inc. (NASDAQ:VIAB): Poised For Long Term Success?

Simply Wall St

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In December 2018, Viacom Inc. (NASDAQ:VIAB) announced its earnings update. Overall, the consensus outlook from analysts appear fairly confident, with profits predicted to increase by 9.8% next year compared with the past 5-year average growth rate of -8.1%. By 2020, we can expect Viacom’s bottom line to reach US$1.9b, a jump from the current trailing-twelve-month of US$1.7b. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Viacom in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

See our latest analysis for Viacom

Can we expect Viacom to keep growing?

The 26 analysts covering VIAB view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of VIAB's earnings growth over these next few years.

NasdaqGS:VIAB Past and Future Earnings, March 31st 2019

This results in an annual growth rate of 3.0% based on the most recent earnings level of US$1.7b to the final forecast of US$2.0b by 2022. This leads to an EPS of $4.45 in the final year of projections relative to the current EPS of $4.19. With a current profit margin of 13%, this movement will result in a margin of 15% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Viacom, I've compiled three important factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Viacom worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Viacom is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Viacom? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.