Multinational media and entertainment corporation Paramount (NASDAQ:PARA) reported Q1 CY2025 results beating Wall Street’s revenue expectations , but sales fell by 6.4% year on year to $7.19 billion. Its non-GAAP profit of $0.29 per share was 12% above analysts’ consensus estimates.

Is now the time to buy Paramount? Find out in our full research report.

Paramount (PARA) Q1 CY2025 Highlights:

Revenue: $7.19 billion vs analyst estimates of $7.10 billion (6.4% year-on-year decline, 1.3% beat) Adjusted EPS: $0.29 vs analyst estimates of $0.26 (12% beat) Adjusted EBITDA: $688 million vs analyst estimates of $642.5 million (9.6% margin, 7.1% beat) Operating Margin: 7.6%, up from -5.4% in the same quarter last year Free Cash Flow Margin: 1.7%, down from 2.7% in the same quarter last year Market Capitalization: $8.28 billion

Company Overview

Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ:PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.

Sales Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Paramount’s sales grew at a weak 1.6% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a rough starting point for our analysis.Paramount Quarterly Revenue

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Paramount’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.3% annually.Paramount Year-On-Year Revenue Growth

We can dig further into the company’s revenue dynamics by analyzing its three most important segments: TV Media, Direct-to-Consumer, and Filmed Entertainment, which are 63.1%, 28.4%, and 8.7% of revenue. Over the last two years, Paramount’s Direct-to-Consumer revenue (streaming) averaged 21.9% year-on-year growth while its TV Media (broadcasting) and Filmed Entertainment (movies) revenues averaged 7.6% and 4.3% declines.

This quarter, Paramount’s revenue fell by 6.4% year on year to $7.19 billion but beat Wall Street’s estimates by 1.3%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Paramount’s operating margin has been trending down over the last 12 months and averaged negative 6.7% over the last two years. Unprofitable consumer discretionary companies with falling margins deserve extra scrutiny because they’re spending loads of money to stay relevant, an unsustainable practice.Paramount Trailing 12-Month Operating Margin (GAAP)

In Q1, Paramount generated an operating profit margin of 7.6%, up 13.1 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Paramount, its EPS declined by 23.5% annually over the last five years while its revenue grew by 1.6%. This tells us the company became less profitable on a per-share basis as it expanded.Paramount Trailing 12-Month EPS (Non-GAAP)

In Q1, Paramount reported EPS at $0.29, down from $0.65 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Paramount’s full-year EPS of $1.21 to grow 23.6%.

Key Takeaways from Paramount’s Q1 Results

It was encouraging to see Paramount beat analysts’ EPS expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its Filmed Entertainment revenue missed. Overall, this print had some key positives. The stock remained flat at $11.70 immediately after reporting.

Paramount had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

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