Shares of Paramount Skydance (PSKY) gained in after-hours trading after the entertainment company reported earnings for its first quarter of Fiscal Year 2026. Earnings per share came in at $0.23, which beat analysts’ consensus estimate of $0.15 per share. In addition, sales increased by 2.2% year-over-year, with revenue hitting $7.35 billion. This beat analysts’ expectations of $7.27 billion.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The stronger results were due to growth in Paramount Skydance’s direct-to-consumer and studio businesses. Direct-to-consumer revenue rose 11% to $2.4 billion, while studio revenue also increased 11% to $1.28 billion. However, TV media remained a weak spot, with revenue falling 6% to $3.67 billion. To improve the streaming business, the company said it is bringing its streaming technology stack together and remains on track for a mid-year launch, which should create a more personalized and unified user experience while improving discovery and monetization over time.
In addition, operating income rose 8.4% to $616 million, beating the $543 million consensus estimate, while adjusted EBITDA jumped 59% to $1.17 billion. Still, free cash flow fell sequentially to $96 million. When it comes to the balance sheet, Paramount Skydance ended Q1 with $1.9 billion in cash and $15.5 billion in gross debt, with debt rising after the company drew $2.15 billion on its revolving credit facility to help pay the $2.8 billion termination fee owed to Netflix (NFLX) tied to the merger agreement.
2026 PSKY Guidance
Looking ahead, guidance was more mixed. Paramount Skydance expects Q2 revenue of $6.75 billion to $6.95 billion, with the $6.85 billion midpoint below the $7.1 billion consensus estimate. However, the company reaffirmed its full-year outlook for $30 billion in revenue and $3.8 billion in adjusted EBITDA, while also saying it remains on track for more than $3 billion in efficiencies through 2027 and over $2.5 billion in run-rate efficiencies by the end of 2026.
Moreover, management said it has made significant progress toward closing the Warner Bros. Discovery (WBD) deal by the end of Q3.
Is PSKY Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on PSKY stock based on one Buy, five Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average PSKY price target of $11.75 per share implies 5.6% upside potential.
