Paramount Global Faces Challenges Despite Promising EPS Growth

Paramount Global's shares have underperformed the market, declining 19.4% over the past year. However, adjusted EPS has significantly exceeded estimates, suggesting potential upside in the future despite recent challenges.

Date: 31-01-2025

AI Rating: 6

Paramount Global has encountered various challenges impacting its stock performance. Over the past 52 weeks, the company has declined by 19.4%, whereas the broader S&P 500 Index has demonstrated a positive change of 22.6%. Such underperformance could indicate investor hesitance, especially with a declining market sentiment towards the company.

The report highlights a significant decline in revenue, as Paramount reported a 5.6% year-over-year decline to $6.73 billion, which fell short of the consensus estimate of $6.97 billion. This decline reflects challenges in revenue generation and market competitiveness, possibly impacting investor confidence.

Despite these setbacks, there are positive indicators regarding profitability. Paramount's adjusted Earnings Per Share (EPS) of $0.49 surpassed estimates of $0.24, marking a substantial 102% beat. Looking forward, analysts expect EPS to grow significantly, with projections of 242.3% year-over-year growth to reach $1.78 for the current fiscal year ending December 2024. This indicates a positive outlook on the company's profitability, which could influence stock prices positively in the coming periods.

Additionally, the company has maintained a consistent earnings surprise history over the last four quarters, beating consensus estimates each time. This trend can enhance investor confidence if continued, possibly providing reasons for stock price adjustment upwards in future periods.

However, the company has been facing scrutiny over its merger activities, with concerns regarding external influences such as Tencent Holdings potentially affecting the stock negatively. On January 15, shares fell over 2% following a congressional call for a federal review of its merger with Skydance Media.

Analysts from Wells Fargo currently rate Paramount Global as a ‘Hold’, but with a mean price target of $12.03, indicating an 8.5% premium to current levels. The Street-high price target of $19 suggests a possible upside of 71.3% from present pricing conditions. This potential upside may attract investors looking for recovery plays.

Stocks: PARA SPX WFC