NEW YORK (TheStreet) -- Shares of CBS Corp. (CBS) are up 1.65% to $60.21 after it was reported that the company plans to issue $1.75 billion of bonds to help buy back existing debt, sources told Bloomberg.
The deal, the first debt offering by CBS in two years, will include $550 million of 30-year bonds and $600 million each of 10-year and five-year notes, sources said.
CBS raised its quarterly dividend this month and doubled its share repurchase program to $6 billion.
The company also set a gross leverage target of 2.5-times, and needs an estimated $2 billion in new debt to reach that threshold, according to research firm CreditSights.
TheStreet Ratings team rates CBS CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CBS CORP (CBS) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, reasonable valuation levels, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- CBS CORP's earnings per share declined by 5.3% 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, CBS CORP increased its bottom line by earning $3.01 versus $2.48 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $3.01).
- 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. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: CBS Ratings Report
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