Cablevision Systems Corp. (NYSE: CVC) is still trading just above the $15.00 mark and its 52-week range is $14.18 to $38.08. The long-term stock chart is a bit misleading because of spin-offs, but the shares remain oversold. Because of its sell-off, Cablevision currently looks cheaper on many metrics compared to Time Warner Cable Inc. (NYSE: TWC), Comcast Corporation (NASDAQ: CMCSA), DIRECTV (NASDAQ: DTV) and Charter Communications Inc. (NASDAQ: CHTR).
If you just watched the Cablevision stock chart, it would seem as though cable was dying. It is not. Cablevision has been cleaning its books up and it has parted ways with Madison Square Garden and AMC Networks for the most part. Again, those changes skew the stock charts.
We no longer have any serious hope of takeover ambitions resurfacing, but the Dolan family did try to buy it before at much higher prices and that deal was rejected. The current market cap is only $4.3 billion and that does make it capable of a deal if another player wanted to make an offer. A sum-of-the-parts analysis remains “oversold” and this value is solely on the merits of the company on a standalone basis. This one can still slide if the market softens, but this remains underpriced and we think higher prices will be reflected when things normalize.
Dividend and income investors now have an accidentally high-yield of almost 4%. Even after the AMC spin-off, shares fell from $25 to under $15 and the selling was just too harsh for a company that trades at close to 11.5-times 2012 earnings estimates.
Our take is that Cablevision should easily be a $20.00 stock after the dust settles, and that opinion has nothing to do with what Barron’s touted as being worth $30.00 per share in a buyout.
The current $15.00 share price compares to a Thomson Reuters consensus price target of $22.14. Our projection calls for close to 33% gains due to mispricing right now, and our projection is even less than the consensus target and far less than what Barron’s recently published.
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JON C. OGG