Summary Points:
- WSJ view that TWX is a Good Bet regardless if deal happens or not.
- TWX has decent numbers with strong margins and uses FCF for dividends and buybacks.
- Valuation is at high end and thus not an attractive holding without the deal.
This morning I was reading the famous Wall Street Journal column “Heard on the Street”. One article was titled “Deal or No Deal, Time Warner Is a Good Bet“. The article made the following points:
- If the deal goes through investors make 22%.
- Time Warner (NYSE:TWX) stable earnings and buybacks have made it a safe bet among media stocks.
- Deal speculation/premium is in the price and would still be there even if deal fails. This is based on TWX appreciation following failed Comcast deal.
- “Deal or no deal, there is still upside for investors in [TWX]”.
Based on the article, TWX fundamentals would support the stock regardless of the deal. So I decided to look at the numbers.
