Media investment bank M.C. Alcamo & Co. is out with its review of multiples in the TV sector as of the end of Q3. The analysis from the firm is that the publicly traded TV companies appear to be undervalued.
“In view of rising profitability throughout broadcasting, the high beta of media stocks, and strength in the broad market index, investor interest appears unduly anemic. We feel that stock prices will recover and advance through earnings season and into 2011. Compared to historic patterns, the sector appears undervalued by at least 10%,” President Michael Alcamo said in an email to RBR-TVBR.
For the six pure play broadcasters, on September 30, EBITDA multiples were at 9.6x ttm EBITDA, down 10% from their levels of 10.7x at the beginning of the year. The decline was even more noticeable at the integrated media firms that own broadcast divisions: the average multiple for nine integrated firms at September 30 was 5.9x, down 25% from an 8.0x multiple on January 1.
In the aggregate, investors appear to be waiting on the sidelines, even as broad indexes have advanced. On September 30, stock prices were at 66% of their 52 week highs, compared to 85% of their 52 week high on January 1. By comparison, on September 30, the S&P 500 index was at 94% of its 52-week high, up from 93% on January 1.
The analysis piece from M.C. Alcamo is attached to this page as a pdf.
For stock price comparisons, RBR-TVBR’s Q3 stock report is available by clicking here.