Ryvicker lowers estimates for Saga


After evaluating the Q2 results and management commentary from Saga Communications, Wells Fargo Securities analyst Marci Ryvicker has lowered her estimates. That’s hardly surprising in the current economic turmoil.

“Consolidated revenue was in line, with radio flat and TV +8% (we were expecting +4% but TV is so small that it does not move the needle). EBITDA beat due to lower expenses than we had forecast – specifically corporate overhead, which was $1.8M v. our $2.1M. Reported earnings per share (EPS) were $0.75 v. our $0.84 – but SGA’s reported results included a $1.3M non-cash charge related to the company’s debt refinancing, which was completed June 13, 2011. Excluding this charge, EPS would have been $0.93 (per our calc), still ahead of our expectation due to higher EBITDA and slightly lower taxes,” Ryvicker said in a note to clients.

“While no formal Q3 guidance was provided, July was described as ‘vacuous’ while August and September are pacing up. At the end of the day, given a tough economic environment and limited visibility, we are reducing 2011 and 2012 EPS estimates to $2.83 and $3.50, from $3.11 and $3.62. We maintain our Market Perform rating and $36-$38 valuation range,” Ryvicker said.

Saga closed Tuesday (8/9) at $33.65.

Auto advertising is a key driver for broadcasters, so analysts have been watching closely to see how the category is doing. “While auto paced up for SGA in the quarter, this ad category is still slow. Mgmt mentioned that consumers are anticipating upcoming sales and incentives, so they are currently on the sidelines, which could be impacting overall auto sales and therefore auto advertising. Interestingly there have not been many cancellations – just overall slowness,” noted Ryvicker.