Shares in media group Future (FUTR), drifted lower despite the company announcing a positive trading update and indicating that full year earnings will be at the top end of consensus estimates of £183.5-to-£193.6 million.
The company also revealed that the recent earnings acquisition of Dennis publishing has been completed.
Future has employed a highly successful strategy that involves leveraging editorial content. Its wide range of websites enables it to generate engaging stories and information on products including hi-fi equipment, bikes and computer games. Future generates commission if readers click on links in its articles to buy goods.
ACQUISITION MOMENTUM
Future has recently made two key strategic acquisitions that have enabled it to simultaneously grow and diversify into new areas. In February the group acquired the financial services and utilities comparison platform GoCo.
In August Future announced the acquisition of a portfolio of brands from Dennis Publishing including Kiplinger, The Week, Money Week and ITPRo. The deal strengthens Future’s position within the Wealth, Knowledge and Business to Businesses technology verticals.
Now that the Dennis acquisition has completed investors are likely to focus on the two key benefits. First, MoneyWeek and Kiplinger provide a highly complementary offering in both the American and UK markets that will enable Future to scale up its presence in the wealth vertical.
Second, The Week UK, The Week US, The Week Junior UK and The Week Junior US, will add over 700,000 subscribers to the Group. The addition of these brands will enable Future to leverage new eCommerce opportunities whilst enhancing the knowledge vertical.
PAUSING FOR BREATH
After a strong run with the shares up by 19% and 92% over the last quarter and year respectively, todays price reaction reflects a pause for breath as investors wait for the fundamentals to catch-up with expectations.
Moreover the shares trade on a prospective premium valuation of 25.2x price earnings for 2022. Shore Capital media analyst Roddy Davidson said:
‘We continue to believe that Future’s focus on leveraging engaging content to drive ecommerce and digital advertising revenues will deliver strong medium term growth?we see further upside potential’.
