Mired In the Muck: BBGI

It’s been 51 weeks since the Bordes family sold a big chunk of Beasley Broadcast Group stock, sending investors scurrying and the company’s stock on a downturn that has yet to ebb.

With Tuesday’s Closing Bell, BBGI is traveling back down toward the $3 level.

On very light volume of 13,795 shares, Beasley stock completed Tuesday’s trading at $3.13 per share, off 3.7%.

It is just 13 cents above its year-to-date low, seen June 17.

And, the latest turn in the wrong direction comes despite BBGI going ex-dividend on June 27.

Since that event, BBGI’s highest closing price has been just $3.30.

Year-to-date, Beasley’s highest closing price has been $4.86, giving the company’s long-term investors pause as the radio station owner struggles with a stock most analysts say is undervalued.

One year ago, BBGI was priced at $11.25.

With the company set to present its Q2 2019 results on a date expected to fall between August 1-5, investors may be looking at Beasley’s balance sheet to review its strength.

That’s what Simply Wall St. did July 3, when it analyzed the small-cap stock. With long-term debt ramped up to $283 million from $212 million and an operating cash to total debt ratio of 9.5%, it’s concerned.

“With debt reaching 87% of equity, BBGI may be thought of as relatively highly levered,” Simply Wall St. writes. “This is a bit unusual for a small-cap stock, since they generally have a harder time borrowing than large more established companies. No matter how high the company’s debt, if it can easily cover the interest payments, it’s considered to be efficient with its use of excess leverage. A company generating earnings before interest and tax (EBIT) at least three times its net interest payments is considered financially sound. In BBGI’s case, the ratio of 2.21x suggests that interest is not strongly covered, which means that lenders may be more reluctant to lend out more funding as BBGI’s low interest coverage already puts the company at higher risk of default.”