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Matthew Roesener

 
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  • Discovery Communications: A Quantitative Perspective [View article]
    Thank you!
    Feb 6 01:30 AM | Likes Like |Link to Comment
  • Discovery Communications: A Quantitative Perspective [View article]
    Hi James,

    Thank you for your comment. I do agree with your valuation of SNI. Although I haven't thoroughly valued the company myself, from a P/E perspective SNI looks to be significantly undervalued. The problem is I don't believe SNI has the innovative product pipeline just yet that is needed for it to grow further. DISCA's creative content is a lot different than SNI. I do see some potential in SNI with its ownership of the Travel Channel. According to Scripps CEO Ken Lowe the Travel Channel "is probably our single biggest opportunity" and "Travel Channel is where we see the biggest opportunity for the growth of the company. Defining that brand and genre is the company's leading priority." - Spokesman Mark Kroeger. I'll have to research SNI further to make a recommendation.

    My valuation of DISCA is based upon the growth of its popular flagship shows and its continuously creative content. For example in the third quarter DISCA's "Animal Planet, Investigation Discovery, Velocity, Destination America, OWN and The Hub, all delivered double-digit growth in the target demographics." - Discovery's Quarterly Publication

    I used last years annual revenue growth rate of 12% going forward. Keep in mind this is a growth forecast over 10 years discounted back to present value. According to the avg analyst growth estimates for the next 5 years, analysts are expecting a 20% compounded annual revenue growth rate. The industry as a whole is growing at roughly 15%. So I still feel my revenue growth estimates are conservative going forward.

    http://yhoo.it/X1Hy8X

    I wanted to reevaluate my model based upon your 8-10% recommendation. If I change the revenue growth forecast going forward to 10% . My price target is roughly $75. This is also based upon using an average operating margin of only 35% going forward, which is pretty conservative.

    In the end, I still believe DISCA stock is a strong buy and I will buy more on pullbacks.
    Feb 6 12:54 AM | Likes Like |Link to Comment
  • Discovery Communications: A Quantitative Perspective [View article]
    Philip,

    Thank you. I appreciate your comment. I actually read both of your articles prior to my post. You did a great job jumping into DISCA's current product lines, growth figures, and management decisions. I became more bullish just reading your articles.

    I completely agree that DISCA is under most investors' radars. I look forward to reading more of your articles as well. Thank you!
    Feb 5 11:32 AM | 1 Like Like |Link to Comment
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