Shares are gaining 0.16% to $86.31 on Tuesday.
"We believe shares at 15.1x our 2016E earnings do not appropriately reflect an accelerating EPS growth outlook and this therefore creates an attractive entry point to a high quality content play within media," analysts said.
It is projected that the company will grow earnings over the next several years, including 22% in 2015, as it benefits from accelerating affiliate revenue growth following a reset of its major renewals, the firm noted.
Separately, TheStreet Ratings team rates TIME WARNER INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate TIME WARNER INC (TWX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and expanding profit margins. We feel its 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:
- TWX's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 4.8%. 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.
- The debt-to-equity ratio is somewhat low, currently at 0.93, 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, TIME WARNER INC's return on equity exceeds that of both the industry average and the S&P 500.
- Compared to its closing price of one year ago, TWX's share price has jumped by 25.63%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- TIME WARNER INC's earnings per share declined by 26.7% 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, TIME WARNER INC increased its bottom line by earning $4.39 versus $3.56 in the prior year. This year, the market expects an improvement in earnings ($4.66 versus $4.39).
- You can view the full analysis from the report here: TWX Ratings Report