Belfast Telegraph publisher INM undervalued, reveals stockbroker
Shares in Belfast Telegraph publisher Independent News and Media (INM) are undervalued and the company is forecast to have built up a cash balance of €84m (£71m) by the end of the year, according to Davy Stockbrokers.
INM, which also publishes Sunday Life and other market-leading print and online publications, will report financial results for the first half of 2016 tomorrow.
In a preview of the results this week, Davy's Robert Stokes said that broader trends painted a bleak picture for the newspaper industry generally, but that INM's ability to grow its digital business as well as to unlock the latent potential in its national distribution business will ensure growth at the top and bottom line for the company.
INM, which is led by chief executive Robert Pitt, trades on a multiple of less than two times its 2017 enterprise value divided by earnings before interest, tax, depreciation, and amortisation, he said.
"We continue to believe that INM is undervalued and that management's ability to grow underlying earnings has not been rewarded," Davy said in a note circulated to clients.
The broker said it is forecasting top-line growth of 1.5% in the first half of the year when figures are published tomorrow - anticipating that growth in the digital and distribution businesses will offset print declines.
Davy said it is also expects earnings growth of €17m (£14m) in the period.
In relation to the cash pile built up by INM, Davy said the company may have to rethink its strategy following the UK vote in June to exit the European Union, because deals may be harder to find.
INM has earmarked the cash for acquisitions, especially of young digital business that would benefit from INM's greater scale.