Why is Paramount Global-B (PARA) up 5.4% since its last earnings report?

It has been about a month since Paramount Global-B (PARA) last reported earnings. Shares have risen about 5.4% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Paramount Global-B headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to better understand the important catalysts.

Paramount Global’s first quarter results broke records, with revenues increasing year over year

Paramount Global posted adjusted earnings per share of 62 cents for the first quarter of 2024, topping the Zacks Consensus Estimate by 82.35%, up from 9 cents reported in the year-ago quarter.

Revenues of $7.68 billion surpassed the Zacks Consensus Estimate by 0.1%. This number increased 5.8% year-over-year, driven by revenue growth from Direct-to-Consumer (DTC), broadcast media and filmed entertainment.

Adjusted OIBDA increased 80% from the prior-quarter level to $987 million.

Selling, general and administrative expenses decreased 5.2% year-over-year to $1.66 billion.

Revenue by type

Advertising revenues (40.3% of total revenues) of $3.09 billion increased 16.8% year-over-year. Affiliates revenues (43.7% of total revenues) of $3.35 billion increased 5.6% year-over-year. Theatrical revenues (2% of total revenues) in the reported quarter were $153 million, up 20% year-over-year. Content licensing revenue (14% of total revenue) of $1.07 billion declined 17.5% year-over-year.

Segment details

DTC Details

DTC revenue increased 24% year-over-year to $1.87 billion, driven by subscriber growth and improved engagement and monetization. DTC subscription revenue increased 22% year-over-year to $1.35 billion, driven by subscriber growth and higher prices for Paramount+.

Paramount+ revenues increased 51%, driven by subscriber growth and ARPU growth. Paramount+ subscribers have reached approximately 71 million, with 3.7 million added during the quarter. The company saw a 26% increase in total viewing hours across Paramount+ and Pluto.

DTC ad revenue increased 31% year-over-year to $520 million, driven by growth from Pluto TV and Paramount+, including benefit from Super Bowl LVIII.

The company reported an adjusted OIBDA loss of $286 million, primarily due to improved domestic profitability for Paramount+.

TV media details

TV Media revenues increased 1% year-over-year to $5.23 billion. Advertising revenue increased 14% year over year to $2.58 billion. This reflected a 23-point advantage in CBS’s broadcast of Super Bowl LVIII.

Affiliate and subscription revenues of $1.99 billion decreased 3% year-over-year, primarily due to a decline in subscriber numbers, partially offset by higher prices. Licensing and other revenues declined 25% year-over-year to $651 million, which includes the impact of 2023 labor strikes on content available for licensing.

OIBDA TV Media’s adjusted value increased 11% year-over-year to $1.44 billion.

Details of filmed entertainment

Filmed Entertainment revenues increased 3% year-over-year to $605 million, while theater revenues increased 20% year-over-year to $153 million.

Licensing revenues were $451 million, down 1% year-over-year. Advertising revenues dropped 80% year-over-year to $1 million.

The company saw an adjusted OIBDA loss of $3 million, down from a loss of $99 million in the prior-year period.

The story continues

Balance

As of March 31, 2024, Paramount Global had cash and cash equivalents of $2.38 billion compared to $2.46 billion as of December 31, 2023. Total debt as of March 31, 2024 was $14. USD 6 billion and remained unchanged.

How have estimates changed since then?

It turns out that estimate revisions have been trending downward over the past month.

As a result of these changes, the consensus estimate moved by -17.78%.

VGM results

Currently, Paramount Global-B has a Strong Growth Score of A, although well behind its Momentum Score of C. However, the stock was rated A for Value, putting it in the top 20% for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. Notably, Paramount Global-B carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

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