Traders and stock brokers know a good buy when they see it.
This could explain why Saga Communications continued its star performance on Wall Street in Thursday’s trading, with a 1.8% gain at 1:23pm Eastern seen despite a first quarter of 2017 that saw its net operating revenue slip to $31.4 million, from $32.7 million, and its net income slide to $1.9 million (32 cents), from $3 million (52 cents per diluted share).
A key reason why Saga stock keeps rising likely has everything to do with the company’s long-term health—and the fact that the Q1 declines are solely due to tough comps tied to political dollars seen last year.
In Q1 2016, Saga saw political revenue of $1.3 million—the exact amount of its net revenue dip. Therefore, Saga on an apples-to-apples basis was flat in Q1 2017. That’s a lot better than some of the other media companies releasing their Q1 earnings.
In his company’s conference call with the investment community, Saga Chairman/CEO Ed Christian also pointed to a decline in the Illinois agricultural industry as a root cause of an advertising decline in Champaign-Urbana and Springfield, respectively.
Another positive for Saga: It’s board of directors today (5/4) declared a quarterly cash dividend of 30 cents per share payable on June 9 to shareholders of record on May 22.
The aggregate amount of the dividend payment is roughly $1.8 million, and the dividend will be funded by cash on the company’s balance sheet.
How are Saga’s pacings? Christian had tough words for the company’s April year-over-year results but said May and June harbor a light at the end of a dark tunnel.
Saga shares have been trading above $50 since late December 2016 and are at their highest value in more than three years. Saga also enjoys a strong market cap of $301.6 million.
Saga owns mainly medium- and small-market radio stations (including Columbus, Ohio, and Milwaukee), along with TV stations in Joplin, Mo., and Victoria, Texas.
Its TV division, while tiny, saw its operating income in Q1 slip to $1.5 million, from $1.7 million.
Saga’s much-larger radio division saw its operating income decline to $4.8 million, from $6.3 million.
Could Saga be a buyer? Yes, Christian says, noting there are good opportunities out there and that Saga plans to expand.
That’s also good news for Saga shareholders.
The company expects to spend approximately $5 million-$5.5 million for capital expenditures during 2017; these expenditures totaled $1.4 million in Q1, up from $1 million in the year-ago period.
Lastly, Christian is, like his counterparts at iHeartMedia and Emmis Communications, a believer in the power of radio. That’s why he’s convinced Saga is a well-oiled ship sailing in rocky waters.
“Maybe we are not a sprinter, but radio is a mass media and an effective medium,” Christian said, noting that some 275 million people listen each week to an AM or FM radio station. “It was an uneasy four months to start the year, but I’m an optimist. Radio is still a good business. This is just a difficult time.”