NEW YORK (TheStreet) -- Shares of Discovery Communications Inc. (DISCA) are rising, up 0.83% to $32.80 in pre-market trading Tuesday, after the global nonfiction media and entertainment company was upgraded to "neutral" from "sell" by analysts at Citigroup this morning.
Analysts at the firm said they raised its rating on shares of the Silver Spring, MD-based company for the near term, citing the company's strong growth outlook.
Citigroup analysts also said they believe Discovery Communications has a positive growth trajectory in all markets it operates.
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The company's U.S. networks consist of domestic cable and satellite television networks, websites and other digital media services.
Separately, TheStreet Ratings team rates DISCOVERY COMMUNICATIONS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate DISCOVERY COMMUNICATIONS INC (DISCA) a BUY. This is driven by multiple 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 revenue growth, reasonable valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DISCA's revenue growth has slightly outpaced the industry average of 8.9%. Since the same quarter one year prior, revenues rose by 14.0%. 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.
- DISCOVERY COMMUNICATIONS INC's earnings per share declined by 42.3% 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, DISCOVERY COMMUNICATIONS INC increased its bottom line by earning $2.97 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($5.13 versus $2.97).
- The gross profit margin for DISCOVERY COMMUNICATIONS INC is currently very high, coming in at 89.99%. Regardless of DISCA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, DISCA's net profit margin of 17.85% compares favorably to the industry average.
- Even though the current debt-to-equity ratio is 1.22, 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 0.78 is weak.
- You can view the full analysis from the report here: DISCA Ratings Report