Shares of Viacom (NASDAQ:VIA) (NASDAQ:VIAB) rallied 4% on Nov. 16 after the media giant posted surprisingly solid fourth quarter earnings. Its revenue rose 5% annually to $3.49 billion, beating estimates by $120 million and marking the company's fourth straight quarter of positive growth.

Its non-GAAP net income rose 29% to $400 million, or $0.99 per share, which beat estimates by three cents. Viacom's growth is encouraging, especially since the company previously struggled with succession issues, cord cutters, a lackluster lineup of cable TV programs, and a weak theatrical slate at Paramount.

A person watches TV.

Image source: Getty Images.

Analysts expect Viacom's revenue and earnings to rise 2% and 3%, respectively, next year. Those growth rates might seem anemic, but they're decent for a stock that trades at just 7 times forward earnings. Does that low multiple -- along with the stock's forward yield of 2.4% -- make Viacom an undervalued dividend stock?

How does Viacom compare to its media peers?

Viacom has a lower P/E and a higher yield than most of its industry peers, including CBS (NYSE:CBS), Disney (NYSE:DIS), and Comcast (NASDAQ:CMCSA).

 

Forward P/E

Forward yield

Viacom

7

2.4%

CBS

10

1.3%

Disney

16

1.5%

Comcast

14

2%

Source: Yahoo Finance, as of Nov. 19.

However, Viacom's stock is cheaper because investors expect it to generate less earnings growth:

 

Current fiscal year

Next fiscal year

Viacom

3%

3%

CBS

19%

10%

Disney

1%

5%

Comcast

24%

10%

Estimated EPS growth. Source: Yahoo Finance, as of Nov. 19.

Viacom also isn't gearing up for a major digital upgrade like Disney, which will launch its streaming platforms next year. Nonetheless, 3% earnings growth remains a solid rate for a stock that trades at 7 times forward earnings.

However, Viacom slashed its dividend in half in 2016 and hasn't raised it since. But looking ahead, the consensus earnings estimate of $4.38 this year should easily cover its $0.80 in dividends with a low payout ratio of 18%. In other words, Viacom still has plenty of room to raise its payout if its core businesses keep generating consistent growth.

But can Viacom keep generating growth?

Viacom's revenue growth during the third quarter was attributed to strong results from Paramount, buoyed by Mission Impossible: Fallout, A Quiet Place and Book Club, which offset the softer growth of its Media Networks division.

 

Revenue

YOY growth

Operating income

YOY growth

Filmed Entertainment

$984 million

25%

$38 million

N/A*

Media Networks

$2.52 billion

(1%)

$708 million

2%

Source: Viacom Q3 earnings report. *Operating loss last year.

This was an interesting reversal from previous years under former CEO Philippe Dauman, when Viacom considered selling Paramount to focus on the growth of its media business. Viacom expects the unit to stay strong throughout fiscal 2018 with the new Bumblebee film and a live action version of Dora the Explorer. It also expects to generate more licensing revenues from shows like Haunting of Hill House and Maniac.

A couple watches a movie in a theater.

Image source: Getty Images.

The media business is still weighed down by weaker ad revenue from its core cable channels like MTV, VH1, and Comedy Central, but it's trying to strengthen that unit with its AMS (Advanced Marketing Solutions) ads, the expansion of Viacom Digital Studios' streaming content, its acquisition of youth-oriented digital media company AwesomenessTV, and a new content partnership with Snap's Snapchat.

Viacom's core businesses are holding up, but it's unclear if they can withstand tougher competition from bigger and better diversified rivals like Disney and Comcast. Recombining with CBS might improve the situation, but Viacom already rejected CBS' attempt to acquire it earlier this year at a below-market price. However, recent reports indicate that CBS could still make another bid in the near future under the direction of Shari Redstone, who owns major stakes in both companies.

Stick with other cheap dividend stocks instead

Viacom is doing better than before, but its future remains murky. It lacks multi-year blockbuster franchises beyond Transformers and Mission Impossible, and its media networks remain on wobbly ground.

The stock looks cheap and it pays a decent dividend, but there are plenty of other high-yielding stocks that trade at single-digit P/E ratios after the recent market correction. I'd take a closer look at those other companies before Viacom, which remains a struggling underdog in the film and media industries.

Leo Sun owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.