Stock Position at Paramount: Buy, Sell, or Maintain?
Paramount Global (PARA), the rebranded media empire encompassing film studios, networks, cable channels, and streaming sites, released its Q2 2025 financial report, showing a mix of positive and negative indicators.
The company's adjusted earnings of $0.46 per share beat estimates by about 12%, but fell 15% from the previous year. Revenues slightly increased by 1% year-over-year to $6.85 billion, missing estimates by a small margin.
Streaming revenue for Paramount Global increased by 39% compared to the previous year, with Paramount+ seeing a 65% increase in sales. However, advertising revenues fell by 4.4%, while affiliate and theatrical revenues increased significantly. Operating income before depreciation and amortization (OIBDA) declined 5%, partly offset by cost reductions in selling and administrative expenses.
Despite these earnings beats, Paramount Global's trailing twelve-month net income is negative (-$14 million), and the stock’s average analyst rating is “Sell” with a 12-month price target below current trading levels ($11.50 vs. $12.31).
The reduced dividend from $0.24 to $0.05, a decrease of nearly 80%, signals management's caution about near-term cash flows or growth prospects, which often concerns income-focused investors. The stock has lost some momentum after an analyst downgrade and trades near its 50- and 200-day moving averages, reflecting cautious market sentiment.
Paramount Global's valuable assets in popular cable channels such as MTV, Showtime, and Nickelodeon, as well as film studios that release hits like Top Gun: Maverick, offer potential for growth. However, the prevailing "Sell" analyst consensus, combined with dividend cuts and overall profitability challenges, suggest that PARA may be a risky investment currently.
Warren Buffett, who invested in Paramount Global's stock last year, continues to hold onto his investment despite the analyst's recommendation. Buffett emphasizes the importance of careful research before buying any stocks, acknowledging that he too makes mistakes in his investments.
Potential investors should consider these mixed fundamentals and closely monitor upcoming earnings calls and strategic initiatives like the Skydance acquisition closing on August 7, 2025, before making a decision. The stock is currently trading at a valuation of 0.3 times trailing-12-month sales.
- In light of Paramount Global's financial report indicating a decline in earnings and net income, as well as a "Sell" analyst consensus and dividend cuts, some investors might find para as a risky investment prospect.
- Being aware that Warren Buffett, despite facing analyst recommendations to sell, continues to hold his investment in Paramount Global, financially-savvy individuals might choose to conduct their own thorough research on the company's potential growth opportunities, such as the Skydance acquisition.
- Given the current market sentiment, cautious investors may prefer to closely monitor upcoming earnings calls and Paramount Global's strategic initiatives like the Skydance acquisition before considering investing in the company, as the stock is trading at a relatively low valuation of 0.3 times trailing-12-month sales.
