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Have you been thinking about buying CBS (CBS)? It's not too far away from its 52-week high. At the end of Tuesday's regular session, the stock, whose colleagues include Disney (DIS), General Electric's (GE) NBC Universal, and News Corp. (NWS), settled out at a price of $15.01; the high for the year is $16.98. The one-year chart tells an interesting story: The trend over the last twelve months has been up, but lately, there's been a healthy amount of sideways action, which, of course, might not be healthy for growth investors.
Then again, for longer-term investors, at least the shares have been holding up, right? And now we come to the second-quarter report, released Tuesday after the bell. What does it tell us about the situation?
According to the press release, adjusted net income more than doubled to 25 cents per share. The Associated Press says this was four pennies ahead of estimates. Furthermore, free cash flow soared 40% in Q2.
Free cash flow -- that's what everyone really cares about when it comes to this broadcaster, isn't it? Well, it's actually important to all companies, but CBS shareholders are hoping that management will eventually be able to raise the dividend that is paid out by their media concern, so free-cash generation is particularly important to the thesis. The quarterly payment had to be cut in recent times. It was a painful blow.
One has to assume that the dividend will be raised at some point in the future if the fundamentals continue to improve (a hint of this idea can be found in the following article over at Bloomberg). But I have no idea when or if that will happen. For me, CBS just isn't the most fascinating media business out there, and I'm going to pass on it until I feel it is finally ready to break through the 52-week high.
Disclosure: I own Disney, GE; positions can change without notice.
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