Future Share Discussion Threads

[red ninja] 26/4/2024 15:09

Investors's Champion tip sheet comment 4/4/24

hxxps://www.investorschampion.com/channel/blog/an-interesting-business-lurks-in-the-wreckage

Future: why so cheap?
Future (AIM: FUTR), which calls itself the global platform for specialist media and also combines Go.Compare, the financial services comparison company it acquired in 2020 for £594m, updated on trading for the six months ended 31 March 2024.

Future owns more than 230 well-known brands such as Country Life, Homes & Gardens, Decanter, Money Week and plenty of technology and gaming titles. It acquired Money Week through the acquisition of Dennis Publishing for £300m in 2021.

The return to growth in the current year has been driven by a strong performance in Go.Compare, alongside good growth in B2B, and a resilient performance in Magazines. This has been offset by a more challenging performance in affiliate products and digital advertising.

There is lots of marketing speak in the update around the “reorganisation to accelerate the Growth Acceleration Strategy”, which means little to us, and plenty more marketing speak to enjoy in the investor relations section of their website here.

They also stated how “cash conversion in the half has been strong” but gave no indication of what this is and indeed the period end net debt position, which was £327m at the 30 September 2023 year end.

Despite the lack of detail, the market was clearly reassured with the news that Future is “on-track to deliver on expectations for FY 2024”, pushing the shares up 16% to 695 pence and market capitalisation to £800m.

By our reckoning statutory free cash flow in the financial year to 30 September 2023 was £159m (the results gave adjusted free cash flow as £253m, which conveniently ignores interest and tax!), which equates to a highly attractive free cash flow yield of c16% based on an enterprise value of £1 billion.

Forecast adjusted earnings of 121 pence for the year to September 20204 result in a PE ratio of only 5.7x, which suggests the market has little faith in forecasts and indeed the longer term outlook.

The shares are 80% down on the highs hit in August 2021, when the market capitalisation was over £4 billion, as it basked in the glory of an acquisition boom under former CEO Zillah Byng-Thorne, who stepped down in 2023.

If the future isn’t half as bad as the market clearly fears, there could be another good recovery story here and as we commented in our earlier article here, with appealing brands and cash flow it certainly looks vulnerable to a bid.

[northwards] 25/4/2024 09:18

Bounce ahead of results. ?

[smokeyjohnson] 19/4/2024 13:44

Will the gap from the 4th April be closed here? Shorts seem to have increased slightly. Perhaps taking advantage of the middle east worries.

[rimau1] 04/4/2024 09:10

I also firmly believe that GoCompare is worth the entire marketcap. Thats all from me.

[rimau1] 04/4/2024 08:38

I very prudently have revenue FY revenue growth of 1percent which is low single digits organic H2. Net profit i assume flat on 2023 so around 140p eps trading under 5x - they should outperform this. The free cash flow is crazy and debt should be down to under 1x so expect acquisitions in H2 once our new CEO is happy advertising has bottomed

[alotto] 04/4/2024 08:22

what is the "expectations for FY 2024" in terms of revenue and net profit then?

[northwards] 04/4/2024 08:16

Feels that way.

[rimau1] 04/4/2024 08:12

Yes, returning to net growth in H2 as forecast. This is very good news, the price action here recently clearly showed the market did not believe that futr would return to growth in 2024. The golden nugget in todays update is the recovery in US direct advertising squirrelled away towards the end. This update could not have been much better IMO. Ridiculous valuation priced for failure.

[alotto] 04/4/2024 08:10

Revenue improvement, ok, what about the bottom line?
Trading update is confusing. The market opened well though

[valhamos] 04/4/2024 08:06

"The expected revenue improvement to the Q4 2023 exit rate has continued, resulting in a return to organic revenue growth in Q2 for the Group."

​

[northwards] 04/4/2024 08:05

Looks like the MMs are trying to figure out what the update means ...

[alotto] 04/4/2024 08:00

Does this mean that there is no net growth?

"The return to growth has been driven by a strong performance in Go.Compare,

alongside good growth in B2B, and a resilient performance in Magazines. This

has been offset by a more challenging performance in affiliate products and

digital advertising as macroeconomic pressures and low visibility continue to

impact the wider sector."

[northwards] 04/4/2024 07:18

So, confirmation that FY 24 expectations will be met. Current PE of c 4.

[harry_david] 23/3/2024 07:35

This little bounce presages a lift to £10, there are so many recovery signals at last. Most important is retail of course, we need ad revenue to return in force.

[alotto] 13/3/2024 20:07

What has dented sentiment after the bounce a few weeks ago?

[rimau1] 09/3/2024 10:53

Interesting discussions, good luck all

[daz] 09/3/2024 09:43

I share the view that the company is too far spread and needs to slim down through disposals but also think the shares are too cheap on a forward P/E of 5 and as mentioned above the advertising cycle will turn at some point and I think probably will be triggered by a fall in interest rates. Markets though look ahead, so I would expect a re-rating ahead of that.
What prompted me to buy yesterday was that the shares reached previous support at 600p and with the RSI so low, look ripe for a bounce from this point

[alotto] 09/3/2024 07:46

My approach with speculative stocks is different. I take a small position and I add on good news, even though the returns are not as good, but I mitigare the risk.
When s stock is genuinely undervalued, with no adverse market conditions and no negative trading updates, I average down. I have a very small position at the moment of £2.5k.

[rimau1] 09/3/2024 07:18

Indeed. However i have found that good research to form a solid buy case at a specific price and drip feeding/averaging down mitigate most of the speculative risk. The uncertainty risk is how we chase alpha returns and hopefully outperform markets. My maiden position was at 5.98 and i have regular limit order set all the way down. Consumer cyclicals need to survive 2024 and 2025 will be good and since we can't time the market this is the year to start looking at such depressed valuations. All IMO of course and this is a higher risk stock

[alotto] 08/3/2024 22:21

Too much uncertainty around this stock, very speculative.

[ggrantsu] 08/3/2024 21:19

After a lot of internal deliberation...I'm of the view that this valuation is now ludicrous. There are many issues with the company...risks around technological disruption risk (not saying it is absolute - but there are clearly risks), the people involved (Jon seems good but the wider board is useless and there is not really anyone properly incentivized in the same regard as shareholders), macro environment (particularly in gaming and tech) is weak.

However...GoCo, as pointed out, is now surely worth at the very minimum 70-80% of the entire market cap...based on the fact that a 10x EBITDA multiple in line with Moneysupermarket doesn't factor in any takeout premium (of course, as we all know, all the UK takeovers we are seeing right now are being done at hefty premiums). EBITDA for GoCo in FY23 was 54.2mm pre any corporate overheads (which one has to assume for - I try to be vey conservative with a figure of 10mm). Unless the rest of the business really is going extinct, there is an opportunity here clearly.

Not sure it will be a smooth road, but one would think this is clearly a candidate for being taken out (a multiple of even just 6x EBITDA would see shareholders handsomely paid) or some kind of major corporate transaction like the sale / spin out of GoCo.

Alongside GoCo, there are some good media brands in fashion/homes/womens/lifestyle. the gaming/tech stuff in my opinion is very weak and unfortunately prime for disruption - their websites are not very functional and just filled with digital ads. my experience using ChatGPT vs Toms Guide really was not particularly encouraging. But either way, there is surely now a relatively strong margin of safety on offer here, and there is a jocky bet on Jon Steinberg to be wagered.

Good luck all - happy to send across my analysis to anyone who messages me on the GoCo valuation. Quite striking visually!!

[rimau1] 08/3/2024 16:48

I have started buying, my assumption being that the sum-of-the-parts conglomerate discount is way too wide, GoCompare has to be worth the entire 700m marketcap. US private Equity could be interested. I will continue averaging down, 2025 recovery deep value play IMO.

[listillo] 29/2/2024 16:14

Why do you say the sites are awful? I disagree, they seem good, but would like to hear why