Long-established in the Media - Diversified industry, Paramount Global (PARA, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 8.58%, juxtaposed with a three-month change of -14.44%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Paramount Global.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 4/10
- Momentum rank: 2/10
Based on the above method, GuruFocus assigned Paramount Global a GF Score of 66 out of 100, which signals poor future outperformance potential.
Understanding Paramount Global's Business
Paramount Global operates in three global business segments: TV media, filmed entertainment, and direct to consumer. The TV media business includes television production studios and various broadcast and cable networks, such as CBS, Paramount, Nickelodeon, and MTV. Filmed entertainment consists of multiple film studios, most importantly Paramount Pictures. Direct to consumer includes streaming platforms like Paramount+, Pluto TV, and BET+. Much of the content on Paramount's streaming platforms is created by the production studios housed within the firm's other two business segments. With a market cap of $8.38 billion and sales of $29.65 billion, Paramount Global's diverse operations have historically contributed to its robust presence in the media industry.
Financial Strength Breakdown
Paramount Global's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 606 companies in the Media - Diversified industry, indicating potential challenges in managing interest expenses on outstanding debt. The Altman Z-Score of just 1.14, below the distress zone of 1.81, suggests financial distress may loom on the horizon. Furthermore, the low cash-to-debt ratio at 0.16 indicates a struggle in handling existing debt levels. The alarming debt-to-Ebitda ratio of 186.57, which is above Joel Tillinghast's warning level of 4, is worse than 99.55% of 672 companies in the Media - Diversified industry, signaling a red flag for the company's debt management.
Growth Prospects
A lack of significant growth is another area where Paramount Global seems to falter, as evidenced by the company's low Growth rank. Over the past five years, Paramount Global has seen a decline in its EBITDA, with a three-year growth rate of -74.1 and a five-year growth rate of -47.7. These figures underscore potential challenges in the company's profitability. Additionally, Paramount Global's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering Paramount Global's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and consider these factors when evaluating the company's future prospects. For those seeking more robust investment opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
