In the face of all the unknowns regarding the Omicron variant of Covid-19, most of the shares in my portfolio have so far either remained unchanged today, or dropped a little.
But some stocks moved higher on the London market this morning. And multi-platform media and digital publisher Future (LSE: FUTR) shot up by almost 15%. And over the past 12 months, it’s up about 117%. Something appears to be going well in the business. So should I buy the stock now?
Stunning results
The catalyst behind today’s move higher was the release of the full-year results report. Back in July, the company said it expected the 2021 results to be “materially ahead of market expectations”. And today’s figures put numbers on the outperformance. The report must look like a thing of beauty to existing shareholders — it showcases a stunning outcome for the business.
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For the trading year to 30 September, revenue shot up 79% compared to the prior year. Cash from operations leapt 115% and adjusted diluted earnings per share by 77%.
But this isn’t some bounce-back from a coronavirus slump last year — there was none. Future has powered through the pandemic with impressive increases in earnings year after year. The directors expressed their satisfaction and “confidence” in the outlook by slapping 75% on the shareholder dividend for the year.
Chief executive Zillah Byng-Thorne said in the report the “exceptional” results build on the long-term record of business growth. She thinks the strong performance arose because of the diversity of revenue streams in the business. Operations have a global reach and the “operating leverage” in the business model also helped drive progress.
High hopes for further growth in America
Byng-Thorne said 23% organic growth was because of the company’s “trusted content” attracting a high-value audience. And growth accelerated in the US where she’s “confident” the business will capitalise on the opportunity.
Around 35% of revenue came from the US in the period, with growth of about 25% compared to the prior year. However, performance in the region was below the 131% gain in revenues the business achieved with its operations in the UK.
As well as organic progress, Future is striding ahead with its programme of acquisitions. The year saw the company take over GoCo Group, Mozo, Marie Claire US, CinemaBlend and, after the period ended, Dennis.
A Covid winner
Byng-Thorne said Future’s business was boosted by Covid-19. But she expects growth to accelerate again in the second half of the current trading year. Meanwhile, City analysts have pencilled in an uplift in earnings of around 12% for the current year to September 2022. And that suggests the rate of growth will slow from the robust triple- and double-digit figures we’ve been seeing over the past few years.
With the share price near 3,666p, the forward-looking earnings multiple is almost 26 when set against that earnings estimate. I think that’s pricey and the high valuation adds risks for investors now.
So I’d be a little cautious about buying the stock today. Nevertheless, I think the business could have a bright future, so I’ll keep the stock on watch, waiting for a better-value entry point.
