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ViacomCBS Earnings Preview: 3 Things Investors Need to Know

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ViacomCBS plans to release its financial results for the first quarter of 2020 before the market opens on May 7. The upcoming earnings report will be the company’s second since Viacom and CBS completed the merger to form the new entity.

Notably, the first ViacomCBS earnings report was short of the expectations. The company posted an EPS of $0.97, which missed the consensus estimate at $1.44. The revenue of $6.9 billion missed the consensus estimate at $7.4 billion.

Will the upcoming ViacomCBS earnings scorecard be impressive? Here are three things investors need to know as they wait for the report.

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ViacomCBS’s earnings expectations amid COVID-19

Wall Street expects ViacomCBS to deliver an EPS of $0.95 on revenue of $6.57 billion for the quarter ended March 2020. Notably, the company’s earnings results will give investors an opportunity to see how COVID-19 has impacted the business.

The virus has forced ViacomCBS to halt its film and television productions. At the same time, the company has suspended theater releases. Walt Disney (NYSE:DIS), which has also stopped its production and box office releases, reported a big drop in its profit for the March quarter even though the revenue increased.

While ViacomCBS’s earnings for the March quarter might take a blow from the coronavirus, the company plans for a better long-term future. Recently, the company tapped Verizon to distribute its Pluto TV video streaming service to its nearly 130 million customers.

ViacomCBS cuts jobs and borrows funds

ViacomCBS’s earnings report is set to arrive at a time when the company cut jobs to control costs. The company aims to eliminate $750 million in annual costs. The cost-synergy will be one of the benefits of merging Viacom with CBS.

The coronavirus has left businesses grappling with weak sales and soaring expenses. In March, ViacomCBS set out to borrow $2.5 billion through selling bonds to shore up its liquidity. The company wrapped up 2019 with $834 million in cash reserve. Disney and Comcast (NASDAQ:CMCSA) also have tapped the debt market to shore up their liquidity amid the pandemic.

Investing in the stock

ViacomCBS stock has taken a blow amid COVID-19. Halting production and theater releases turned off investors. However, the company’s earnings report comes as the stock starts to make a comeback. At $15 per share, ViacomCBS stock has rebounded more than 50% from its pandemic lows. The stock spots more than a 20% gain over the past month. At this point, investors can scoop up ViacomCBS stock at more than a 72% discount to its 52-week high.

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