Five days ago, Saga Communications delivered first quarter results that were less than stellar. Expense reductions were not enough to prevent Saga from seeing its net income dip to $758,000 ($0.13 per share) from $1.68 million ($0.28). However, Saga’s debt leverage ratio is 0.92, with just $10 million in long-term debt.
That could be particularly attractive to investors. It’s just one theory as to why Saga shares rocketed upward by 30% on Tuesday.
At the Closing Bell on the Nasdaq GlobalSelect market, SGA was up 29.88% to $27.43 on2 volume of 88,367 shares, against average volume of 17,000 shares.
The gain puts Saga shares back to where they were in April 2020, and are up more than $10 a share from a pandemic-fueled low of $17.02 seen on October 26, 2020.
The leap is likely tied to a big institutional investor investment in SGA; some 90.3% of all outstanding shares are held by such investment firms, with 23.04% of ownership as of March 30, 2021 held by Daniel Tisch‘s Towerview LLC.
The second-largest investor in Saga is T. Rowe Price Associates, with 11.1% ownership. Saga’s No. 3 investor is FMR LLC, with 10.42% ownership.
Although Saga gave back 2% of the stock jump in early after-hours trading, the gain is exceptional.
And, it comes after the release of a Q1 2021 report that shows Saga’s debt leverage ratio at 0.92, with just $10 million in long-term debt.
Sitting in for CEO Ed Christian, who had a health issue he is recovering from, Saga CFO Sam Bush answered three questions submitted to Saga’s C-Suite prior to the short call. One sought the answer to why the company has not paid back the last $10 million of its bank debt? Bush responded by noting that Saga’s June 2021 board meeting will address this concern.
With event revenue set to grow, and “double-digit” core advertising growth against good April and May comps, Saga is set for a comeback.
Perhaps investors see that clearly, and believe in management’s delivery capabilities against its peers.
Responding to a query from RBR+TVBR about the big day on Wall Street for SGA, Bush responded, “I wish I knew. [It is] nice to see it going up. We’ve thought it was very undervalued for quite some time.”
