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Viacom CBS Q4 Earnings Outlook: Spotlight on 200-day SMA

Written by Larince Zhang

Viacom CBS Inc. ($PARA), a global media and entertainment company, provides streaming services, digital video products, premium content and experiences, and production, distribution and advertising solutions to audiences around the world. The company will report its fourth-quarter and full-year 2021 financial results after the market close on Tuesday, February 15.

In 2021, ViacomCBS’s performance was in line with market expectations. Despite facing stiff competition from media giants like Netflix, Walt Disney, Fox, and a forced sell-off in ViacomCBS stock following the Archegos scandal, the company has maintained its status as one of the top streaming companies, with revenues in every category (except theatrical revenue) increasing year-to-date every year since 2019, and even surpassing $1 billion in revenue for the first time in the most recent quarter (representing a 62% year-over-year increase). As the company stated in the last quarter, it has nearly 47 million streaming subscribers worldwide thanks to its effective strategy in global content, distribution and market expansion to drive scale.

Figure 1:  ViacomCBS reported sales and EPS versus analyst forecasts. Source:  money.cnn
Figure 1: ViacomCBS reported sales and EPS versus analyst forecasts. Source: money.cnn

Fourth-quarter results could be “a combination of headwinds and tailwinds, ” as the company’s CEO Bob Bakish said, but consensus estimates remain mixed. Sales are expected to report $7.5 billion, up 13.6% and 8.7% year-over-year, respectively . However, EPS is expected to decline 76.7% sequentially and 141.9% year-over-year to $0.43.

Some positives that may continue to favor the company include its mastery of content creation, strong brand positioning, solid fundamentals (lower beta, faster user and MAU growth), partnership with T-Mobile, partnership with Comcast, etc. Some headwinds include declining licensing revenue, increased churn, low conversion rates, ongoing supply chain issues, and more.

Given the mixed outlook for the upcoming earnings release, #ViacomCBS has a Zacks Rank of #3 (Hold). Last year, following the Archegos scandal, the company’s stock price tumbled (it has been under 100-day SMA pressure since then), from more than $100 a share to a low of $28.28 on Dec. 20. In January 2022, #ViacomCBS stock formed an inverted V after failing to break above 100-day SMA (yellow) resistance before rebounding and forming a higher low at $29.82.

Last week, the 100-day SMA was challenged again, with the company’s stock successfully closing above it and breaking above $35.60 (38.2% FR, extending from the June 2021 high to the December low of the same year). As long as resistance turns to support unchanged, we may see upside potential in the stock and a test of the next resistance level at $37.85 (or FR 50.0%, which also intersects the 200-day SMA (purple). This could be a pivotal point where the overall trend direction could change from bearish to bullish.

Otherwise, if the market disappoints and sparks a sell-off, a close below $35.60 and the 100-day SMA could resume the bearish trend, with next support at $32.80 (or 23.6%) and $29.74  (FR 78.6% extending from the March 2020 lows to the March 2021 high).

About the author

Larince Zhang

长达八年的实盘操作与市场分析经验。涉足的金融产品包含外汇、大宗商品、股指、商品期货、指数期货以及股票。大学主修金融学,秉持着学以致用的心态务必把课堂上所学的知识与临场实践经验相结合。 经过多年交易经验的积累与总结,坚信“大道至简”四字箴言。价格的变动即是幕后人为交易买卖所驱使。坚信市场考验的不是技术,而是人心。唯有正确的交易认知、缜密的策略布局与严谨的资金管理,方才是成熟交易的真谛。

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