Will CBS Continue this Bull Run?

With shares of CBS (NYSE:CBS) trading around $51, is CBS an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

CBS operates as a mass media company in the United States and abroad. The company operates in segments that include entertainment, cable networks, publishing, local broadcasting, and outdoor. Consumers seek entertainment of various forms and through an array of platforms at an increasing rate. Through its segments, CBS is able to fulfill consumer needs as it continues to release content that excites the masses. Consumers around the world always seek varied forms of entertainment, and CBS is dedicated to delivering that media, which can only lead to growth and rising profits well into the future.

CBS and Time Warner Cable's (NYSE:TWC) battle over retransmission fees is now being mediated by the Federal Communications Commission. Three million Time Warner customers have not had access to CBS programming since August 2, as the two companies can't seem to reach an agreement. The FCC has been reluctant to intervene, but negotiations between the companies have deteriorated to the point that government intervention seems to be the only solution.

T = Technicals on the Stock Chart Are Strong

CBS stock has been surging higher over the past several years. The stock is currently consolidating slightly below all-time high prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, CBS is trading above its rising key averages, which signals neutral to bullish price action in the near term.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of CBS options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
CBS Options	30.11%	86%	84%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
September Options	Flat	Average
October Options	Flat	Average

As of Wednesday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Increasing Quarter Over Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on CBS’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for CBS look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	16.92%	27.78%	9.32%	20.00%
Revenue Growth (Y-O-Y)	6.42%	6.43%	2.99%	1.58%
Earnings Reaction	3.86%	2.04%	3.95%	1.05%

CBS has seen increasing earnings and revenue figures over the past four quarters. From these numbers, the markets have been upbeat about CBS’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has CBS stock done relative to its peers – Comcast (NASDAQ:CMCSA), 21st Century Fox (NASDAQ:FOXA), and Walt Disney (NYSE:DIS) — and sector?

	CBS	Comcast	21st Century Fox	Walt Disney	Hot Safest Stocks To Watch Right Now Sector
Year-to-Date Return	35.74%	12.82%	42.99%	22.37%	28.37%

CBS has been a relative performance leader, year to date.

Conclusion

CBS is one of the largest nationwide providers of entertainment and mass media services. The company’s dispute with Time Warner Cable is now being mediated by the FCC because the companies have not been able to reach an agreement. The stock has been soaring and is now consolidating slightly below all-time high prices. Over the past four quarters, earnings and revenues have been rising, which has left investors excited about the company. Relative to its peers and sector, CBS has been a year-to-date performance leader. Look for CBS to OUTPERFORM.