MENU

Is 2018 the year for APN Outdoor Group Ltd?

Credit: DubSnipe

It’s safe to say that 2017 was a year to forget for APN Outdoor Group Ltd (ASX: APO):

  • It lost out on a major contract with Yarra Trams to a competitor JCDecaux which left a $7 million EBITDA gap
  • It lost out on the potential merger with another competitor oOh!Media Ltd (ASX: OML) and was left with a $3.4 million bill for the transaction costs
  • Its long time CEO Richard Herring retired and they had to pay $1.7 million in retirement costs
  • It had to record impairment write downs for its investment associated with the Catch technology trial to the tune of $2.2 million

It’s no surprise then that the outdoor advertising operator has seen its share price drop over 30% from highs of $6.36 a year ago to the current $4.30 at the time of writing.

Today, the company released its FY 2017 results which were lacklustre:

  • Revenue was up 4% to $342 million
  • Underlying EBITDA was up 4% to $90 million
  • Statutory profit was down 9% to $44 million
  • A final dividend of 12.5 cents per share, bringing the full year fully franked dividend to 19.2 cents per share (a yield of 4.4% on the current share price)

The market was not pleased with the result with the share price dropping 4% in early morning trade.

With that all said, there is still some reason for optimism:

  • The company is restructuring its management team led by former V8 Supercars chief executive James Warburton who was appointed in October last year. A new CFO is expected to be announced shortly and the search is on for the newly created role of Chief Innovation and Strategy Officer.
  • The company has indicated that it still has the desire to pursue suitable M&A opportunities
  • The company has low exposure to contract renewals in FY 2018 and FY 2019

My personal view is that the industry is going through some fundamental changes with tough competition, a race towards digital advertising, more engaging content and better data analytic tools.

I wouldn’t rush in purely based on the reasonable PE of 16 that APN outdoor is currently trading at. I would rather wait to see the new management team develop their strategy and build a track record.

The Richest Man Alive Invests in This

The richest man in the world has just launched a $100 million investment fund and investors who don't take note could miss out on a massive opportunity.

And it isn't by sheer luck. He did it by looking to the future and investing in the big ideas of tomorrow.

This could be your chance to get in on the ground floor!

Click here to discover more!

Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.