At the event, Discovery Communications CEO David Zaslav said the company has "fully stabilized our U.S. business for growth," according to The Hollywood Reporter. Zaslav expects the company to show growth in the U.S. over the next few years, "based on even our worst-case scenario."
"Our ad sales this quarter will be up mid-single digits, and that's a first, it's the beginning of a turn," Zaslav continued. "Part of that is our performance, and part of it is the fact that the market is stronger."
Zaslav said the company will have at least $10 billion in available capital over the next five years, which it will use to invest in organic growth, acquisitions, and stock buybacks.
Despite the CEO's positive comments, there are still concerns that the cord-cutters, or people who choose to not have cable subscriptions, will hurt the company, according to THR.
TheStreet Ratings team rates DISCOVERY COMMUNICATIONS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate DISCOVERY COMMUNICATIONS INC (DISCA) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, a generally disappointing performance in the stock itself and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Even though the current debt-to-equity ratio is 1.31, it is still below the industry average, suggesting that this level of debt is acceptable within the Media industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.10 is sturdy.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 27.43%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 59.63% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Media industry average. The net income has decreased by 24.5% when compared to the same quarter one year ago, dropping from $379.00 million to $286.00 million.
- You can view the full analysis from the report here: DISCA