Zacks Investment Research upgraded leading media conglomerate in the U.S., Viacom Inc. (VIAB), by a notch to a Zacks Rank #1 (Strong Buy) on Jul 10, 2014.
Why the Upgrade?
Viacom’s film division is again set to register record-high numbers in the upcoming quarters with the release of the much anticipated flick, “Transformers: The Age of Extinction”. To date, the movie has generated more than $600 million worldwide (as per box office Mojo) and is expected to cross the $1 billion mark soon. Such impressive box office collections, mainly in the overseas market, were buoyed by the success of the action film in China, where the movie garnered the highest foreign collections of over $200 million.
In addition, Viacom’s film segment is poised to gain considerable momentum with the release of another Michael Bay production from the director of the Transformer series, “Teenage Mutant Ninja Turtles”, in Aug 2014. Moreover, prominent movie director Christopher Nolan’s Interstellar is also scheduled to release in Nov 2014. An extensive movie line-up coupled with rating improvements will only drive Viacom’s movie business but will also boost its advertisement revenues.
Viacom is also offering video-on-demand websites to AT&T Inc.’s (T) U-Verse customers and Time Warner Cable (TWC) subscribers. Viacom has also recently renewed its agreement with Netflix, Inc. (NFLX). These significant distribution deals will help the company augment its affiliated fee revenues along with creating a strong brand value for its TVEverywhere service.
Recently, Viacom raised its quarterly cash dividend to $0.33 from $0.30 per share for the company class A and class B common stocks. Moreover, the company has $8.01 billion left under its share buyback authorization. Meanwhile, the company aims to buy back nearly $3.25 billion shares in fiscal 2014. Such aggressive buyback plans and increased dividend payments will continue to boost shareholders wealth.