Paramount stock has dropped significantly but may be undervalued due to strong potential assets

From Nasdaq: 2024-06-18 21:54:34

Paramount Global stock (NASDAQ: PARA) has dropped by nearly 30% since January, while Disney (NYSE: DIS) has seen a 10% increase. After failed merger talks with Skydance Media, other interested parties like Sony and Apollo Global Management have emerged. Paramount’s heavy investments in streaming have impacted profits and stock performance.

Over a longer period, PARA stock has plummeted from $35 in early 2021 to around $10, marking a 70% decline. Returns were negative in 2021, 2022, and 2023, underperforming the S&P 500 each year. The Trefis High Quality Portfolio has consistently outperformed the S&P, indicating a challenging environment for individual stocks.

Facing weak consumer sentiment and high interest rates, Paramount could struggle to outperform the S&P 500. Despite this, the company reported strong Q1 2024 results with revenue growth and earnings improvement. The streaming business is gaining momentum, with Paramount+ adding subscribers and increasing revenue through price raises.

Paramount stock is currently priced at around $10 per share and looks attractive. Although a deal to sell the company fell through, Paramount’s assets, including valuable franchises and a strong theatrical presence, make it appealing to potential investors. The stock’s valuation at 8x projected 2024 earnings is notably lower than Netflix’s, signaling potential for growth.

Recent returns for PARA stock show a 15% decline in June 2024, a 31% decrease year-to-date, and an 84% total drop since 2017. In comparison, the S&P 500 has seen positive returns. Trefis Reinforced Value Portfolio has also performed well, highlighting the challenging market environment for individual stocks.



Read more at Nasdaq: Despite Skydance Drama Is Paramount Stock Still Cheap At $10?