This company, which primarily operates radio broadcast stations earning revenue from advertising, has been grouped into radio broadcast service sector in video &audio goods and service industry.
It seems that demand for radio advertising of companies in this sector has been weak and declining as indicated by continuingly decreasing local ad revenue of those companies in the past three years.
The decrease in revenue has been hurting profitability of companies and we thus see the cash flow continuingly decrease as revenue and margin went down. To maintain the growth in their cash flow and improve profitability, companies in this sector have tried to sell their low profitable radio stations and acquire high performance radio stations, a strategy, which seems to help slow down the decline in margin and cash flow in the first few of months of 2018.
The typical company in this sector has a gross margin of 19%, a SG&A as percentage of sales of about 7%, and operating margin of 13%.
The typical enterprise price/sales ratio is 25(12 months trailing).
It seems that demand for advertising service of this company has been declining in the past three years.
The first quarter of fiscal 2018 compared with 2017(ended Mar 31, 2018)
Radio organic revenue (excluding sales of business) decreased about 4%.
Fiscal 2017 compared with fiscal 2016
Radio organic revenue (excluding sales of business) decreased about 3%.
Fiscal 2016 compared with fiscal 2015
Radio organic revenue (excluding sales of business) decreased about 3%.
Its gross margin (direct costs) has been down to about 17% in 2018 (12 month trailing) with impacts of asset sales. With increased SG&A as percentage of sales (8%), we have seen that its operating margin was down to 9% in 2018.
Stock performance
Currently this company has an enterprise price/sales ratio of about 20(12 month trailing). We think this stock may be overvalued compared with its peers.
