Talking Numbers

This a crucial week for one of the hottest sectors

This a crucial week for one of the hottest sectors

This is one of the biggest weeks for one of the hottest trades this year.

Media companies are reporting all this week. Big names such asLiberty Media, Disney, Time Warner, 21st Century Fox, Viacom, AMC, CBSand News Corp. will be releasing their most recent quarter's results. On the heels of its $94 million take this weekend for Marvel's "Guardians of The Galaxy,"Disney's shares are already trading at all-time highs.

Gina Sanchez, founder of Chantico Global, said one name on that list is particularly cheap compared withits peers.

(Read: Fox open to giving Time Warner board seats: Report)

"Generally, the media content providers have all been trading at very moderate P/Es (price-to-earnings multiples) but Viacom is very cheap relative to the rest of the industry and the rest of the S&P," said Sanchez, a CNBC contributor. Viacom is valued at 13 times its fiscal 2015 expected earnings.


Forward P/E

News Corp.






Time Warner


21st Century Fox


Liberty Media




"But what's more interesting is that just recently, Time Warner was just as cheap," notes Sanchez, "but Rupert Murdoch put a bid on Time Warner and that basically bumped it up 15 percent."

Should 21st Century Fox not be able to acquire Time Warner, Viacom may be a viable acquisition alternative, according to Sanchez. "From a value perspective, these content providers – and particularly Viacom – are actually a pretty good deal right now," she said.

But Richard Ross, global technical strategist at Auerbach Grayson, is not as optimistic as Sanchez.

"The price action is very disappointing here especially given the merger activity or potential merger activity in this space," said Ross, a "Talking Numbers" contributor. He sees the stock's recent break below its 200-day moving average as a big factor in his pessimism.

(See: CNBC's Media Money)

"It's a very basic sell signal but it's also a very important one given the length of the trend," said Ross, adding that this sets the stage for a test of its support on the low end of its trading range at around $78. "If you were to take out that support of that trading range, it would project downside to much lower levels."

"If you're bullish on the stock, you really want to see it get back above that 200-day moving average to tell us that the uptrend is still intact," Ross said. "Absent that type of upside move, I would avoid the name in the short term and I wouldn't be a buyer based on the potential for a takeover here."

To see the full discussion on Viacom, with Sanchez on the fundamentals and Ross on the technicals, watch the above video.

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