ETM has consistant and improving earnings and balance sheet. They are so darn profitable and have strong cash flow of $2+ in these lean times and $3.50/share back in 2008. Plus adverising is improving. And here we are at 1/5 2007 valuation and almost 1/3 of this year's peak.
Prob a combo of factors. One potential issue is ROIAK extended their timeline to deal with their capital structure issues. Securing financing has been difficult in this environment and this company's banks and bondholders are forcing this company to deal with this issue now. Fear of higher interest exp or other negative event has weighed on their share price. The financing issue has impacted other companies operating in this sector as well. Also, fear of double dip recession and resulting impact would weigh on advertising related sectors in general and has led to a pick up in shorting activity in all of these companies' stocks. However, ETM does not have any pressing issues that will force them to deal with their bank facility (due June 2012). Company will continue to amortize debt aggressively over next year and leverage will be in the mid-4x within 12 months. High yield and bank financing markets should be more accomodating by then and when they extend these maturities - at an attractive rate - the company will again be valued on a FCF multiple basis and the stock will appreciate.
I agree there must be some interest fear. But even in the current environment a minimally profitable media company like EVC in the hard hit spanish segment managed to get 400 million at 8.9%. Comparatively, ETM is very profitable and generates gobs of cash and has done so for a very long time. It would seem that even today ETM could negotiate an interest rate that is not significantly higher than their current financing.
But having said that, you are right to point out that there are years left to the current financing and ETM fundamentals keep getting better. I guess their immediate plan of attack would be to pay down debt, grow earnings/cash flow and refinance at a favorable debt level and interest rate where they can comfortably pay significant dividends.
Momentum is downward across the industry (stock price wise). That, of course, could change ON A DIME. And will.
Fear of double dip. Advertising sector is viewed as highly cyclical to economy. This is hogwash, though, as the radio companies have reported in their earnings release, yes, a bit of a slowdown in June-July...but that ad pacings for the next few months are up. (Look at Saga's recent release; they are even predicting industry growth of 4% in 2011.)
Golden opportunity here. I HOPE we drop to $6 on ETM today or tomorrow, so I can buy more.
I will sell other positions I own, if needed, to buy more ETM at $6.
What they hey, at $6.35, I'M PUTTING IT ON SUPER STRONG BUY RIGHT NOW.
I expect to double my money on ETM, in the next 6 months...6-12 months at worst.