A Financial examination of CTC Media, Inc
The TV broadcasting industry has performed extremely well over the past four years. Some investors may say that because of triple digit proportion price growth, it is time to cash in some of your capital gains. Its true large-cap leaders in this group have seen meaningful growth. Rogers Communications, Grupo Televisa, and Central European Media Enterprises are at historical highs, and committing any new capital may be a bit of a risk. Nevertheless, there is a new company, CTC Media (CTCM), which has the basic growth and substantial business plan to catch up with these competitors and produce meaningful proportion price growth.
With respect to CTC’s business plan, Reuters claim that CTC, “operates the CTC Network, a Russian television network offering entertainment programming targeted at 6-54 year-old viewers, and the Domashny (Home) Network, a Russian television network principally targeted at 25-60 year-old female viewers.” The company operates in a country which has experienced meaningful growth in the past year. According to Bloomberg sets, Russia’s Russian RTS Index has seen 60% growth since July of 2006. As economic growth continues to stimulate, more consumers are able to buy television sets, acquire the CTC network, allowing for already more growth for this company. Where does the growth come from? Reuters claim that, CTC, “generate significantly all of their revenues from the sale of national television advertising, which they place by Video International.” More consumers watching television method more audience members to watch the advertisements. If growth continues to grow in Russia, there should be no reason why CTC will not growth in terms of revenue and profit any less than it currently is. In addition, CTC has also been heavily involved in M&A activity by CEO Alexander Rodnyansky and other employees, and given the high ROE and other management ratios, there should be trust in the decisions Rodnyansky and his staff make.
Going back to revenue possible from advertising, it is not to say that CTC does not already have meaningful figures. According to Capital IQ, CTC has seen year over year quarterly growth enhance at a rate of over 30%. Comparing this number to Rogers’ 13% growth or Grupo Televisa’s 10%, there is some alpha separation between these companies. While some investors may argue that CTC is nevertheless a comparatively new company, already this corporation’s revenue per proportion of 3.2 beats Grupo Televisa’s 0.06 figure. Revenue growth has also carried down to both operating margins and profit margins. CTC has a profit margin near 29% and an operating margin close to 43%. These numbers are greater than Grupo Televisa’s respective 23% and 36% figures, Rogers’ 7% and 15% respective numbers, and Central European Media’s 3% and 24% respective statistics. However, CTC is not only performing well relative to the three financial statements, but this corporation is also doing quite well regarding price to earnings performance. It’s forward P/E multiple of 22.5 is considerably lower than the 40.54 industry average. The number is also below Central European’s ratio of 22.85 and Rogers’ multiple of 26.91. Taking growth into account with the pin ratio, CTC, over a five year growth rate, looks at a 0.48 figure, considerably less when compared to Grupo Televisa’s 1.97 figure. consequently, from these numbers, there is meaningful sustain to claim that CTC is a growth stock.
However, another question may be if this corporation is a value stock in addition? already with its comparatively low P/E ratio compared to its competitors, the answer is nevertheless no. Looking at its enterprise value, which surprisingly is below its market capitalization, to figure out revenue and sales figures is not to alluring. The company’s price to sales of 11.05 and enterprise value to revenue of 10.58 is quite high when compared to the rest of the industry. consequently, there may be some hesitation owning this stock, because the price is too high compared to its sales. Nevertheless, another indicator, enterprise value to EBITDA, brings up a different view. With a 12.74 ratio, arguably better than many of its competitors, the company is nevertheless heavy with cash. And because Russia is continuously growing, bringing more customers to CTC, there should be some optimism that revenue numbers will continue to soar, pleasing owners of this stock who fear the high proportion price.
additionally, additional optimism can be directed to the management team of CTC Media. CEO Rodnyansky and the over 1000 employees who work for this company have done a superb job producing gains relative to assets and equity. It’s ROE of 35% beats the industry average of 8%. The company also beats out Grupo Televisa’s 26% respective figure, Rogers’ 16% number, and Central European’s 3% return on equity. In addition, return on assets for CTC has beaten the industry average 3% with its own respective 29% production. Return on Investments has also been a bright identify for this corporation, because its 34% provide easily beats out the 3% figure the industry holds.
Looking at the financial strength of this company, its debt is incredibly low relative to its cash and equity, and as a consequence, the company has a current ratio over 6.00. Along with its solvency, the company also sees a fairly high short ratio of 3.2. While many investors may argue this to indicate negative sentiment, many technical analysts claim that a high short ratio method there is a strong possibility any good news will considerably raise the proportion price, because of the rapid covering. Speaking of technical examination, the company, while only publicly trading for less than 10 months has already seen over 50% proportion price growth in linear fact, and should continue to see this pattern.
consequently, while CTC Media may not be undervalued, there is a lot of possible for this company. Its revenue numbers are great, its management team is already better, and a continuing growth trend in the Russian economy will allow an already high possibility for sales and profit. High sales and profit will rule to larger EPS figures and, consequently, a greater chance for the proportion price to rise already higher. Like all middle-cap stocks, CTC and its 4 billion dollar capitalization is a risk, but this risk will payoff in the long term if you start investing in it now.