By Rob Otman
Time Warner (NYSE: TWX) is an $80 billion company today. Investors that bought shares one year ago are sitting on a 35.24% total return. That’s above the S&P 500’s return of 16.31%.
Time Warner stock is beating the market, and it reports earnings tomorrow. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Time Warner reported a recent EPS growth rate of 24.32%. That’s below the media industry average of 28.27%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the media industry is 34.68. And Time Warner’s ratio comes in at 16.77. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Time Warner stock is 91.40%. That’s below the media industry average of 115.15%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Time Warner’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Time Warner comes in at 18.41% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Time Warner’s profit margin is above the media average of -0.86%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Time Warner is 16.79%, and that’s above its industry average ROE of 15.24%.
Time Warner stock passes five of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Strong Buy.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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