Value Stocks Respond Favorably to Stimulus Expectations
Most stocks on the Cabot Undervalued Stocks Advisor recommended list had strong performance this past week. Notable standouts included Equitable Holdings (+11%), General Motors (+18%), Molson Coors (+14%) and ViacomCBS (+15%).
Part of the strength was perhaps due to money managers’ general optimism that seems to brighten with turn of the calendar. With last year’s bonuses firmly in the bag, professional investors often view January as the start of a new clock. This translates into a higher tolerance for risk-taking, as there are nearly 12 months ahead to make up for any mistakes. Cyclical and value stocks tend to be major beneficiaries of this optimism.
Another driver is likely the renewed hopes for another major stimulus package from the soon-to-be-unified House, Senate and President’s office. Freshly created money should drive consumer spending higher and rebuild confidence in the upcoming economic rebound.
The sacking of the Capitol Building in Washington seems to have had no direct effect on the stock market. We think this shocking event will have longer-term tails that are as-yet unpredictable.
We are making a few adjustments to our recommended list to reflect the changes in stock prices and fundamentals.
Share prices in the table reflect Tuesday (January 12) closing prices. Please note that prices in the discussion below are based on mid-day January 12 prices.
Note to new subscribers: You can find additional color on each recommendation, their recent earnings and other related news in prior editions of the Cabot Undervalued Stocks Advisor on the Cabot website.
Send questions and comments to Bruce@CabotWealth.com.
UPCOMING EARNINGS RELEASES
January 20: U.S. Bancorp (USB)
January 21: JetBlue (JBLU)
January 28: Dow, Inc. (DOW)
THIS WEEK’S PORTFOLIO CHANGES
Bristol-Myers Squibb (BMY) – raising from Buy to Strong Buy.
ViacomCBS (VIAC) – raising our price target from 43 to 48.
Columbia Sportswear (COLM) – reducing from Buy to Hold.
Terminix Holdings (TMX) – reducing from Buy to Hold.
Equitable Holdings (EQH) – reducing from Hold to Sell.
LAST WEEK’S PORTFOLIO CHANGES (January 6 letter)
No changes.
GROWTH/INCOME PORTFOLIO
Bristol-Myers Squibb Company (BMY) is a New York-based global biopharmaceutical company. In November 2019, the company acquired Celgene for a total value of $80.3 billion, including $35.7 billion in cash and $40.4 billion in stock. We are looking for Bristol-Myers to return to overall revenue growth, both from resilience in their key franchises (Opdivo, Revlimid and Eliquis) and from new products currently in their pipeline. We also want to see the company execute on its $2.5 billion cost-cutting program which will likely remain intact with the MyoKardia acquisition.
Bristol-Myers presented at the JPMorgan Healthcare Conference earlier this week. This annual conference is a major event for biopharma companies and investors. Bristol’s slide deck is available on its investor relations website. The company said that its current drug pipeline could produce up to $25 billion in annual revenues to replace revenues lost due to patent expirations. It also highlighted its expectations of producing up to $50 billion in cumulative free cash flow from 2021-2023 – a remarkable amount considering its $150 billion market value. Bristol will accelerate its debt paydown (net debt is already relatively low) and is planning $3-4 billion in share repurchases this year. All of this is impressive, particularly for a stock trading at only 8.8x earnings and paying a 3.0% dividend yield.
BMY shares rose about 8% in the past week and have about 18% upside to our 78 price target.
The stock trades at a low 8.8x estimated 2021 earnings of $7.46 (unchanged from last week). Bristol’s fundamental strength, low valuation and 3.0% dividend yield that is well-covered by enormous free cash flow makes a compelling story. Raising BMY to a STRONG BUY.
Cisco Systems (CSCO) generated about 72% of its $48 billion in revenues from equipment sales, including gear that connects and manages data and communications networks. Other revenues are generated from application software, security software and related services, providing customers a valuable one-stop-shop. Cisco is shifting toward a software and subscription model and ramping new products, helped by its strong reputation and its entrenched position within its customers’ infrastructure.
The emergence of cloud computing has reduced the need for Cisco’s gear, leading to a stagnant/depressed share price. Cisco’s prospects are starting to improve under CEO Chuck Robbins (since 2015). The company is highly profitable, generates vast cash flow (which it returns to shareholders through dividends and buybacks) and carries $30 billion in cash, double the $14.6 billion in total debt.
Acacia Communications terminated its July 2019 agreement to be acquired for about $2.6 billion by Cisco, citing the lack of approval from Chinese regulators. Cisco is litigating the termination, saying that Acacia actually does have approval. Two possible issues are the rising tech tensions between the U.S. and China (which may have made approvals murky) and the sharp increase in technology share prices since July 2019, leading Acacia to seek, in effect, a higher price. Acacia shares surged on the news, up about 20% so far. This fight is in its early stages, as Cisco received a temporary restraining order on the break-up from the Delaware Chancery Court and a trial is likely ahead. There are many possible outcomes: Cisco raises its bid, Cisco walks away, another bidder emerges, or a protracted legal battle ensues. This last option is now underway, but we see a higher bid and acceptance as the likely outcome. Raising the bid to perhaps $90/share is only a 28% premium to the original $70/share deal price. The incremental $900 million probably isn’t that big of an issue in the overall scheme of Cisco’s aspirations.
CSCO shares rose 4% in the past week and have about 21% upside to our 55 price target. The shares trade at a low 14.4x estimated FY2021 earnings of $3.16. This estimate was unchanged in the past week. On an EV/EBITDA basis on FY2021 estimates, the shares trade at a discounted 10.0x multiple. CSCO shares offer a 3.2% dividend yield. BUY.
Coca-Cola (KO) is best-known for its iconic soft drinks but nearly 40% of its revenues come from non-soda brands across the non-alcoholic spectrum, including PowerAde, Fuze Tea, Glaceau, Dasani, Minute Maid and Schweppes. Its vast global distribution system offers it the capability of reaching essentially every human on the planet.
While near-term outlook is clouded by pandemic-related stay-at-home restrictions, secular trends away from sugary sodas, high exposure to foreign currencies and always-aggressive competition, Coca-Cola’s longer-term picture looks bright. Relatively new CEO James Quincey (2017), a highly-regarded company veteran with a track record of producing profit growth and making successful acquisitions, is reinvigorating the company by narrowing its oversized brand portfolio, boosting its innovation and improving its efficiency. The company is also working to improve its image (and reality) of selling sugar-intensive beverages that are packaged in environmentally-insensitive plastic. Coca-Cola is supported by over $21 billion in cash which offsets much of its $53 billion in debt. Its growth investing, debt service and $0.41/share quarterly dividend are well-covered by free cash flow.
KO shares fell 5% in the past week on downgrades from JPMorgan, RBC, Guggenheim and Deutsche Bank. The downgrades followed two themes. First, the slower roll-out of Covid vaccines will delay Coca-Cola’s post-pandemic recovery. We see this as a timing issue and are not particularly concerned with the precise timing of the recovery.
Second, Coca-Cola faces a tax claim for $3.3 billion by the IRS in a dispute over Coke’s cost allocations used to determine the company’s U.S. taxes during the 2007-2009 time period. This is not new news, and we’ve considered the maximum risk to be a $3.3 billion cash payment. Yet, analysts are focusing on a higher cost, as much as $9-$10 billion if taxes from 2010 to 2017 (until the tax code was changed) are disputed.
We are not legal experts, but we believe the case will be resolved at a reasonable cost if not won outright. The cost allocation formula that Coca-Cola used was pre-approved by the IRS, and the IRS appears to be using Coke’s bottlers as a comparison despite the clearly different economic models, among our reasons. Regardless, the issue will be an overhang on the shares for months.
The stock has about 28% upside to our 64 price target. While the valuation is not statistically cheap, at 23.7x estimated 2021 earnings of $2.11 and 21.5x estimated 2022 earnings of $2.33 (the two estimates ticked down by a cent in the past week), the shares are undervalued while also offering an attractive 3.3% dividend yield. BUY.
Dow Inc. (DOW) merged with DuPont in 2017 to temporarily create DowDuPont, then split into three parts in 2019 based on the newly combined product lines. Today, Dow is the world’s largest producer of ethylene/polyethylene, the world’s most widely-used plastics. Dow is primarily a cash-flow story driven by three forces: 1) petrochemical prices, which are often correlated with oil prices and global growth, along with competitors’ production volumes; 2) volume of chemicals sold, largely driven by global economic conditions, and 3) ongoing efficiency improvements (a never-ending quest for all commodity companies to maintain their margins).
There was no meaningful news on the company this past week.
Dow shares jumped about 10% this past week and have about 1% upside to our 60 price target. We are keeping the shares a “Hold” for now as there may be some additional upside – we’re reluctant to sell too soon. The shares trade at 18.5x estimated 2022 earnings of $3.22, although these earnings are two years away. This estimate rose about 1 percent in the past week.
The high 4.7% dividend yield is particularly appealing for income-oriented investors. Dow currently is more than covering its dividend and management makes a convincing case that it will be sustained. However, there is a small risk of a cut if the economic and commodity recoveries unravel. HOLD.
Merck (MRK) – Pharmaceutical maker Merck focuses on oncology, vaccines, antibiotics, and animal health. Keytruda, a blockbuster oncology treatment representing about 30% of total revenues, holds an impressive franchise that is growing at a 20+% annual rate. Merck is not a front-runner in Covid-19 vaccines but has a treatment for hospitalized patients with severe or critical Covid-19 cases.
To tighten its focus, Merck will spin off its Women’s Health business, along with its biosimilars and various legacy brands, by mid-year 2021. These segments currently generate roughly 15% of Merck’s total revenues yet comprise half of its product roster. Merck also recently divested its stake in vaccine maker Moderna. Given the high valuations of other animal health businesses like Elanco and Zoetis, we would not be surprised to see Merck spin off or divest its animal health business. Merck has a solid balance sheet and is highly profitable.
Primary risks include its dependence on the Keytruda franchise, possible generic competition for its Januvia diabetes treatment starting in 2022, and the possibility of government price controls.
Merck’s presentation at the JPMorgan Healthcare Conference provided an encouraging update on how it plans for expanding its Keytruda franchise to reduce its end-of-decade patent expiration risks. Also, the company pointed out the strengths of its pipeline and animal health business. Overall, the company’s outlook is healthy.
Merck shares rose 3% this past week and have about 26% upside to our 105 price target. Valuation is an attractive 13.2x this year’s estimated earnings of $6.31 (estimate rose 3 cents this past week). The 3.1% dividend yield offers additional income-oriented investors. Merck produces generous free cash flow to fund this dividend as well as likely future dividend increases. BUY.
Tyson Foods (TSN) is one of the world’s largest food companies, with over $42 billion in revenues last year. Beef products generate about 36% of total revenues, while chicken (31%), pork (10%), and prepared/other contribute the remaining revenues. It has the #1 domestic position in beef and chicken with roughly 21% market share in each. Its well-known brands include Tyson, Jimmy Dean, Hillshire Farms, Ball Park, Wright and Aidells. Tyson’s long-term growth strategy is to participate in the growing global demand for protein. The company has more work to do to convince investors that its future is brighter, particularly as it is more of a commodity company (and hence has lower margins) compared to its food processor peers.
Tyson recently raised its dividend by 6% to $0.445 per quarter. Tyson’s recovery will remain volatile from quarter to quarter but is on the right track.
The company settled price-fixing claims with some poultry buyers, although it didn’t announce a dollar amount. Competitor Pilgrim’s Pride will pay $75 million to settle some of its claims, but this may or may not be similar to what Tyson is paying. Claims still remain outstanding from other major chicken buyers.
The stock rose about 2% in the past week (the price-fixing settlements appear to have had little impact on the shares) and has about 16% upside to our 75 price target. Valuation is attractive at 11.3x estimated 2021 earnings of $5.71. This estimate rose 2 cents in the past week. Currently the stock offers a 2.8% dividend yield. BUY.
U.S. Bancorp (USB), with a $70 billion market value, is the one of the largest banks in the country. It focuses is on consumer and commercial banking through its 2,730 branches in the midwest, southwest and western United States. It also offers a range of wealth management and payments services. Unlike majors JP Morgan, Bank of America and Goldman Sachs, U.S. Bancorp has essentially no investment banking or trading operations.
USB shares remain out of favor due to worries about a potential surge in pandemic-driven credit losses and weaker earnings due to the low interest rate environment.
However, U.S. Bancorp is one of the best-run banks in the country. Long known for conservative lending, its non-performing assets are only 0.41% of its total assets, lower than most peers and only modestly higher than a year ago. Also, unlike the prior cycle, home mortgage lending today is a source of credit strength. U.S. Bancorp has a solid capital base, bolstered by its sizeable credit loss reserves of over 2.6% of total loans. The bank maintains one of the best expense control ratios in the industry.
U.S. Bancorp announced that it will acquire the debt servicing and securities custody services business of MUFG Union Bank. The deal adds about $320 billion in assets under custody/administration to U.S. Bancorp’s $7.7 trillion in assets custody business. While the price wasn’t disclosed, the bank will likely be able to add the revenues at a small incremental cost.
Supporting bank stocks in general has been the increase in Treasury yields. The 10-year bond now trades at a 1.17% yield, up from 0.93% at year-end. Investor worries about the rising chances for higher inflation, and heavier supply of Treasury issues, are behind the higher interest rates.
The shares rose about 8% in the past week and have about 17% upside to our 58 price target. Valuation is a modest 12.0x estimated 2022 earnings of $4.16. This estimate rose about 2% this past week. On a price/tangible book value basis, USB shares trade at a not-modest 2.1x multiple, but this ratio ignores the value of its payments, investment management and other service businesses that have low tangible book values but produce steady and strong earnings. Currently the stock offers an appealing 3.4% dividend yield. BUY.
BUY LOW OPPORTUNITIES PORTFOLIO
Columbia Sportswear (COLM) produces the highly recognizable Columbia brand outdoor and active lifestyle apparel and accessories, as well as SOREL, Mountain Hardware, and prAna products. For decades, the company was successfully led by the one-of-a-kind Gert Boyle, who passed away late last year. The Boyle family retains a 36% ownership stake and Gert’s son Timothy Boyle remains at the helm.
After a disappointing third quarter, after which the stock fell sharply, as price-sensitive investors we raised COLM shares back to a Buy. We think the company low-balled its guidance, with its long-term earnings power impeded but pushed out into the future. It also announced personnel changes in several key operational roles. Columbia’s balance sheet remained solid.
Columbia announced that they hired a senior Nike executive to oversee their U.S. sales force, and that John Culver, a current Starbucks director, will join Columbia’s board of directors. We view both of these moves as quite favorable.
Columbia’s shares rose about 9% this past week and have about 8% upside to our 100 price target. Valuation is 25.2x estimated 2021 earnings of $3.67, with the earnings estimate unchanged from last week. On 2022 estimated earnings of $4.64 (up one cent this past week), the valuation is a more reasonable 19.9x. For comparison, the company earned $4.83/share in 2019. With the shares trading just above 92 and approaching our 100 price target, we move them to HOLD.
Equitable Holdings (EQH) owns two principal businesses: Equitable Financial Life Insurance Co. and a majority (65%) stake in AllianceBernstein Holdings L.P. (AB), a highly respected investment management and research firm. Equitable was spun-off from former French insurance parent AXA in 2018, although AXA still owns just under 10% of Equitable. With its newfound independence, Equitable is free to pursue new opportunities.
The company is well-capitalized and has significant liquidity. It continues to de-risk and de-capitalize its balance sheet. Its diverse, high-quality investment portfolio is hedged against adverse changes in interest rates and equity markets. Equitable’s lower capital requirements are helping it continue its share repurchase program. The company is targeting a 50-60% of earnings payout ratio in the form of combined dividends and share repurchases. While Equitable’s large variable annuities book may be vulnerable to market pullbacks, the company continues to slowly but steadily prove its stability and strength.
AllianceBernstein shares (AB) are modestly attractive in their own right, partly due to their high 7.9% dividend yield. Prospective investors should be aware that the shares represent a limited partnership interest, may produce K-1 taxable income, and have other tax implications. Our October 14th note has more color on AllianceBernstein.
There was no meaningful news on the company this past week.
EQH shares rose 11% in the past week and have about 2% upside to our 28 price target.
We are moving EQH shares to a Sell, as they are nearly at our price target. From here, the risk/reward appears unfavorable, so we are taking profits. We don’t see any particular fundamental issues at Equitable, and the 2.5% yield continues to offer some appeal. EQH shares have risen 16% since the original recommendation and 43% since the CUSA analyst change at the end of June. SELL.
General Motors (GM) under CEO Mary Barra (since 2014) has transformed from a lumbering giant to a well-run and (almost) respected auto maker. The company has smartly exited many chronically unprofitable geographies (notably Europe) and trimmed its passenger car roster while boosting its North American market share with increasingly competitive vehicles, particularly light trucks. We consider its electric and autonomous vehicle efforts to be near industry-leading. We would say it is perhaps 75% of the way through its gas-powered vehicle turnaround, and is well-positioned but in the very early stages of its EV development. GM’s balance sheet is sturdy, with Automotive segment cash exceeding Automotive debt. Its credit operations are well-capitalized but may yet be tested as the pandemic unfolds.
After a remarkably strong third quarter, GM outlook is for a strong 2021, with perhaps a return to $6.50 in per share earnings that it would otherwise have produced in 2020.
There was a lot of favorable news on GM recently. First, the company reported that its 4th quarter U.S. vehicle sales rose 4.8% from a year ago, one of the best results in the industry. GM is estimated to have gained about ½ point of market share in 2020. GM also regained the top spot over Ford in large pickup truck sales, an increasingly important category that comprises 17% of total vehicle sales, up from only 12.5% five years ago. Prices also rose considerably, ranging from +4% for light pickup trucks to +11% for large SUVs, helped by tight inventories. Price increases represent almost pure profit for carmakers.
Also, GM said that it is working with “all the best startups” on next-generation electric vehicle battery technology and planning to boost production of its Ultium battery system. The company is pressing hard to become a major battery supplier, perhaps pushing Tesla into a weaker market position.
GM spoke at the annual (virtual) Consumer Electronics Show, announcing its launch of Brightdrop, a new electric delivery truck and related services business. Its first product is the EP1, an electric-powered pallet. The EV600 van will be ready for delivery by year-end to its first customer, FedEx. This segment offers considerable promise for new growth for GM.
GM shares surged 18% since last week and now are approaching our recently-raised 49 price target. Valuation is at 7.4x estimated 2022 earnings of 6.46. This estimate slipped fractionally, as the rising Covid case-count may slow demand and a shortage of computer chips are slowing production. Our 49 price target can be thought of as assuming a 7x multiple of $7.00 in earnings. GM may have more innovative firepower and earnings potential than we previously appreciated. HOLD.
JetBlue Airlines (JBLU) is a low-cost airlines company. Started in 1999, the company serves nearly 100 destinations in the United States, the Caribbean and Latin America. The company’s revenues of $8.1 billion in 2019 compared to about $45 billion for legacy carriers like United, American and Delta, and were about a third of Southwest Airlines ($22 billion).
Its low fares and high customer service ratings (with among the highest customer satisfaction ratings in the industry) have built strong brand loyalty. Low costs, including its point-to-point route structure, have helped JetBlue produce high margins in the past, particularly relative to the legacy carriers. Its TrueBlue mileage awards program is a recurring source of profits, as it sells miles to credit card issuers.
While the pandemic has sent JetBlue, and the entire industry, into a near-term depression, we believe consumers (and eventually business travelers) are likely to return to flying. Good news on Covid vaccines, the continued economic recovery, and pent-up demand are starting to bring back passengers. To help reduce its $6 million/day cash burn (cash outflows from operating losses and capital spending), JetBlue is aggressively cutting its costs and benefitting from significantly lower fuel prices than a year ago. Its cash balance of $3.6 billion, bolstered by a recent equity raise (which led to our price target trim to 19 from 20), gives it plenty of time to recover. The company’s debt is somewhat elevated at $4.8 billion.
The shares carry more than the usual amount of risk, given uncertainties from the pandemic, fuel costs, labor issues, high capital spending, elevated debt, the ever-present risk of irrational competition and the overall economy.
JetBlue and American Airlines are moving forward with their new alliance, following a regulatory review. The two will collaborate to offer additional flights and connections in the northeast as well as to several international destinations.
JBLU shares rose 6% this past week and have 28% upside to our 19 price target. The stock trades at 13.9x estimated 2022 earnings of $1.07 (this estimate rose a cent over the past week and is volatile based on Covid case trends). On an EV/EBITDA basis, the shares trade at 5.5x estimated 2022 EBITDA. BUY.
Molson Coors Beverage Company (TAP) – The thesis for this company is straight-forward – a reasonably stable company whose shares sell at an overly-discounted price. One of the world’s largest beverage companies, Molson Coors produces the highly recognized Coors, Molson, Miller and Blue Moon brands as well as numerous local, craft, and specialty beers. About two-thirds of its $10 billion in net revenues are produced in the United States, where it holds a 24% share of the beer market.
Investors’ primary worry about Molson Coors is its lack of meaningful (or any) revenue growth as produces relatively few of the fast-growing hard seltzers and other trendier beverages. Our view is that the company’s revenues are resilient, it produces generous cash flow and is reducing its debt, traits that are value-accretive and underpriced by the market. A new CEO is helping improve its operating efficiency and expand carefully into more growthier products.
We anticipate that the company will resume paying a dividend mid-year, perhaps at a $0.35/share quarterly rate, which would provide a generous 2.7% yield.
There was no meaningful news on the company this past week.
TAP shares rose 14% in the past week and have about 13% upside to our 59 price target.
Estimates continued to tick up in the past week. TAP shares trade at 12.3x estimated 2021 earnings of $4.22. This valuation is low, although not the stunning bargain from a few months ago.
On an EV/EBITDA basis, or enterprise value/cash operating profits, the shares trade for about 8.6 current year estimates, among the lowest valuations in the consumer staples group and well below other brewing companies.
For investors looking for a stable company trading at a low valuation, TAP shares continue to have contrarian appeal. Patience is the key with Molson Coors. We think the value is solid although it might take a year or two to be fully recognized by the market. BUY.
Terminix Global Holdings (TMX) is both a new company and an old company. While the name “Terminix” is one of the largest and most widely recognized names in pest control, the company previously was obscured inside of the ServiceMaster conglomerate. With the sale of ServiceMaster Brands, the company changed its name to Terminix. The company appears to have fully addressed its legal liability from deficient termite treatments, removing an overhang on its shares.
A new CEO, Brett Ponton, former head of Monro (MNRO), joined in August 2020. His leadership at Monro led to sales growth and a strong recovery in its share price. Our expectation is that he will bring sales growth, operational efficiency and integrity to Terminix, ultimately leading to a higher share price. The company’s balance sheet is in good condition. Major risks include the possibility of higher litigation expenses, difficult industry competition that may exert pricing pressure, and possible execution risks by the new leadership. TMX shares carry more risk than typical CUSA stocks.
There was no meaningful news related to the company this past week.
Terminix shares rose about 9% in the past week and have 6% remaining upside to our 57 price target.
Reliable consensus 2022 earnings estimates appear to be settling at around $1.43/share. This would put the TMX multiple at a high 37.8x, but we recognize that these types of companies generally are valued on EV/EBITDA. On this basis, the shares trade at about 19x EBITDA.
As the shares are approaching our price target, we are reducing our rating to HOLD.
ViacomCBS (VIAC) is a major media and entertainment company, owning highly recognized properties including Nickelodeon, Comedy Central, MTV and BET, the Paramount movie studios, Showtime and all of the CBS-related media assets. The company’s brands are powerful and enduring, typically holding the #1 market shares in the highest-valued demographic groups in the country. ViacomCBS’s reach extends into 180 countries around the world. Viacom and CBS re-merged in late 2019 and are now under the capable leadership of former Viacom CEO Robert Bakish.
Viacom is being overhauled to stabilize its revenues, boost its relevancy for current/future viewing habits and improve its free cash flow. The company is shifting away from advertising (currently about 36% of revenues) and affiliate fees (currently about 39% of revenues), toward content licensing – essentially renting its vast library of movies, TV shows and other content to third-party firms like Netflix and others. Viacom is building out its own streaming channel (Paramount+) and other new distribution channels, which are generally showing fast growth. Ultimately, we think the company may be acquired by a major competitor, given its valuable businesses and content library, as well as its bite-sized market cap of about $20 billion.
Its challenges include the steady secular shift away from cable TV subscriptions, which is pressuring advertising and subscription revenues. The pandemic-related reductions in major sporting events are also weighing on VIAC shares. However, ViacomCBS’s extensive reach, strong market position and strategic value to other, much larger media companies, and its low share valuation, make the stock appealing.
There was no meaningful news on the company this week.
VIAC shares surged about 15% this past week and have about 2% upside to our 43 price target. We are raising our price target to 48 to reflect the company’s improving position in streaming.
Valuation is currently at about 9.0x estimated 2021 EBITDA, which we believe undervalues the company’s impressive leadership and assets. On a price/earnings basis, VIAC shares trade at 9.7x estimated 2021 earnings of $4.33 (up a cent from a week ago). ViacomCBS shares offer a sustainable 2.3% dividend yield and look attractive here. BUY.
