Viacom (VIAB) Stock Lower, Executive Chairman's Competence Questioned - TheStreet

NEW YORK (TheStreet) -- Viacom  (VIAB) - Get Report stock is slumping by 3.76% to $50.38 in morning trading Friday after 92-year-old Executive Chairman Sumner Redstone's competence was questioned in a probate lawsuit filed in Los Angeles County Superior Court.

Redstone controls roughly 80% of the voting shares in the media companies CBS and Viacom through a holding company, National Amusements, according to Reuters.

Redstone is mentally absent, "listless" and has taken to uncontrollable crying spells, Manuela Herzer, one of Sumner's former girlfriend's, said in court documents filed on Wednesday, Reuters reports. He is unable to walk or stand unassisted, needs sleeping medication and communicates mostly through grunts, Herzer alleges.

The lawsuit requests that he receives a brain scan and mental health examination to determine whether he is fit to make his own decisions, Reuters adds.

"It is a meritless action, riddled with lies, and a despicable invasion of his privacy. It proves only that Ms. Herzer will stop at nothing to pursue her personal financial agenda," Redstone's attorney Gabrielle Vidal said in a statement, the Wall Street Journal reports. "Herzer's claim that she filed this lawsuit out of concern for Mr. Redstone is preposterous."

Separately, TheStreet Ratings team rates VIACOM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate VIACOM INC (VIAB) 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 increase in net income, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 20.8% when compared to the same quarter one year prior, going from $732.00 million to $884.00 million.
  • VIACOM INC has improved earnings per share by 28.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VIACOM INC reported lower earnings of $4.75 versus $5.45 in the prior year. This year, the market expects an improvement in earnings ($11.96 versus $4.75).
  • Although VIAB's debt-to-equity ratio of 3.47 is very high, it is currently less than that of the industry average. Along with the unfavorable debt-to-equity ratio, VIAB maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.
  • Net operating cash flow has declined marginally to $1,233.00 million or 0.08% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, VIACOM INC has marginally lower results.
  • You can view the full analysis from the report here: VIAB

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.