Discovery Communications (NASDAQ:DISCA) has been a poor stock market performer for the past few years, with shares recently hitting new all-time lows at around $22 per share. Currently, the P/E ratio is about 12 in a market where the average stock is valued at about double that. On its face, it seems as if the stock is trading at a 50% discount to the market and could double just by the market increasing the valuation to the market level. This suggests that investors believe the prospects for Discovery Communications are dim going forward. However, the market is overlooking a global company with excellent management and loads of owned, unique, proprietary content that can continue bringing audiences and advertisers for years to come. Once the market appreciates the quality of the combined company's assets, shares could double in the next three years.
What Is Discovery Communications?
It is a collection of cable channels and television content that spans the globe. From Discovery's 10-K, here is a description of what the company does: