They've got Prime earnings and cost savings to come in. They have a digital earnings stream now. Yes, TV ad rates may be weaker and are obviously cyclical, but hopefully their strong showing in TV viewer rates will be mitigating that. My main point is that the earnings should be nothing like as volatile as recent years with the income stream mix as it is now AND the interest burden much reduced with the lower debt position. Find me another market leading stock with an EBIT multiple of under 4x earnings. It's too cheap, and that's the real point, not whether the next or following earnings results come in +/- $30m. At a $320m EBITDA ($280m EBIT?) it is still way too cheap. Goldman's slapped a Price Target of 42c on it when it was trading at 62c. They wanted to create a panic out at just the time the market was crapping out.
This stock could be debt free in 2.5 years, as an example, if they choose. What price then $280m EBIT just as an example. Would you take an EBIT (approximating free CF) yield of 25%. That equates to 73c per share (4x EBIT). I'd bite your hand off for an ungeared company generating a 25% FCF yield, when you might be getting 3% in the bank at best and a 5% yield on your geared investment property.
SWM Price at posting:
46.8¢ Sentiment: Buy Disclosure: Held
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