I had a look at NYSE GTN (Gray Media) and its a really expensive stock which trades at a ridiculous enterprise value thanks to its onerous amounts of debt. As of September 30 2024 it had $5,893 million USD in long-term debt with only $420 million in market capitalisation bringing it to a $6,313 million enterprise value (this calculation isn't precise as there is further preferred stock/ revolving credit facility debt that I haven't bothered to include). Gray Media has a leverage ratio of 5.9x which is nearly four times that of SWM! In actual fact Grey Television (Nyse:GTN- Gray Media) is a stock which appears to trade as cheap as SWM but in reality its nearly 4 times more expensive once you factor in its unsustainable debt!
The biggest hint that Gray Media is a dog of a stock is that its debt currently trades significantly below PAR (in other words if debt holders are losing money shareholders should be very concerned for their investment thanks to debt ranking above equity).
Assuming Gray Media earns approx $1,050m Adjusted EBITDA in CY2025 (this figure is wildly optimistic and is the same adjusted EBITDA that the business would earn in a political advertising year of 2024 and 2026) it trades at an enterprise value of approx 6 times EBITDA.
If SWM was to right now trade at an enterprise value of 6x current EBITDA it would be trading at north of 55 cents per share!
When I say that SWM is the cheapest media stock I have ever seen I mean it.
SWM Price at posting:
16.0¢ Sentiment: Buy Disclosure: Held
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