CBS Corporation Stock Buy Recommendation Reiterated (CBS)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- CBS Corporation (NYSE:CBS) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:

• Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 46.51% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CBS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
• CBS CORP has improved earnings per share by 12.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CBS CORP increased its bottom line by earning $1.90 versus $1.05 in the prior year. This year, the market expects an improvement in earnings ($2.56 versus $1.90).
• The debt-to-equity ratio is somewhat low, currently at 0.67, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.11, which illustrates the ability to avoid short-term cash problems.
• The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, CBS CORP's return on equity exceeds that of both the industry average and the S&P 500.

CBS Corporation, together with its subsidiaries, operates as a mass media company in the United States and internationally. The company has a P/E ratio of 15.3, above the average media industry P/E ratio of 15.1 and below the S&P 500 P/E ratio of 17.7. CBS has a market cap of $20.33 billion and is part of the services sector and media industry. Shares are up 26.8% year to date as of the close of trading on Wednesday.

You can view the full CBS Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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