Media and cable companies could see a15% to 20% increase in earnings per share and cash flow under the new tax law approved by the U.S. Senate Tuesday night, according to Wells Fargo analyst Marci Ryvicker.
The new tax law has a 21% corporate tax rate, down from 35%, plus new rules for deducting interest expenses and capital expenses.
Among the media companies, Ryvicker thinks that AMC Networks, the Walt Disney Co. and 21st Century Fox have the most potential upside in terms of earnings per share.
Related: Report: Comcast Big Beneficiary in Tax Reform
Looking at cash flow, Cable One, News Corp., Comcast, Tegna and Nexstar have the most potential upside thanks to the new tax law.
“We view Comcast and Sinclair as being the most undervalued (period) under tax reform,” Ryvicker said.
Separately AT&T, which is trying to acquire Time Warner but has been sued by the Justice Department over antitrust concerns, praised the tax bill and reiterated that it plans to invest an additional $1 billion in the U.S. when it becomes law.
“We thank Senate Majority Leader McConnell and Senator Hatch for their hard work to bring about meaningful tax reform that brings the U.S. corporate tax rate in line with the rest of the industrialized world,” said Randall Stephenson, AT&T chairman and CEO. “This bill will spur much-needed investment and economic growth in the United States.”
AT&T says that since 2012 it has invested more in the United States than any other public company. Based on research, every $1 billion in capital invested in the telecom industry creates about 7,000 jobs for American workers.