ITV - tumultuous times

(Simon) #1

Hello all,

I picked up some stock in ITV the other day when it was at around 112p, and today after the axing of the Jeremy Kyle show (finally…!) it might fall even lower. I am hoping that with a continued producition of quality drama (plus Love Island obvs) and the launch of Britbox in partnership with the BBC that ITVs share will rise once again. It also seems that ITV is trying to shift it’s income away from what it can’t control (advertisement) towards what it can (producing quality programmes for the wider market). Plus it’s current dividend yield is pretty tasty (around 7%).

What does the Freetrade community think about ITV’s prospects?

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(Mark L) #2

They are on my watch list, if the price drops I might make a move.

#3

The price is under £2 at the moment, I think it will continue to drop and then you will see it increasing again. I’ve been contemplating investing into it over the past few weeks but not 100% committed at the moment.

#4

Love Island isn’t all good - the death of previous contestants has taken its toll on this too

(Simon) #5

Absolutely - I think the impact of reality TV on it’s “contestant’s” mental health is coming to the fore very rapidly. It will definitely have ramification on ITV and television at large.

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(David Kent) #6

I haven’t invested in ITV myself, I try to stick to investments I have some more background in.

A glance at the fundamentals though shows it’s an interesting pickup.

They seem to be beating expectations, have a fairly average bank balance for what they do, and they seem to be pretty cheap from a value perspective.

However it does feel a little bit of a value trap right now. But I’ll add it to my watch list, I don’t have any UK media directly so might be worth me investigating more.

(Parrish Claxton) #7

I bought some shares awhile back off back of rumours of digital tv streaming service (britbox). Currently -14.8% but I’m optimistic the share price will pick up. In the meantime the dividend % is pretty good.

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(Simon) #8

Does anyone have any good ideas of other companies to compare ITV’s fundamentals with? They have an all time low P/E at the moment, but I can’t think of another remotely similar company to compare ITV to.

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#9

Metropole, Discovery, Television Francaise 1 perhaps? No peers in the UK I don’t think.

(Kenny) #10

Been following this, after the JK issue it all went downhill fast.

(Simon) #11

Ah yeah good ideas! I did a brief comparision with TV Francaise 1 and (although I’m no expert :speak_no_evil:) their financials look remarkably similar except for ITV being a bigger company. Both sitting around a similar P/E, although ITV’s yield is substantially higher for better or worse…!

(Dave Smith) #12

Do they have a policy on Dividends? is it linked to earning or free cash flow or something? looking at dividend history it goes up and down, they don’t have a long history of steady or increasing dividends

Edit: I think in many cases linking the dividend to how well the company is actually doing rather than just churning out the same % every year is a good thing, just wondering if they have a written policy they are sticking to

(Gordon) #13

ITV is mentioned in this article about value investing ben-grahams-deep-value-rules

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(Simon) #14

Oh brilliant, thanks for sharing that was a really interesting article.

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(Simon) #15

A slight concern about ITV: was recently directed to this page defining a ‘value trap’ and one of the examples it gives is:

A media company whose valuation has ranged from 6x-8x EV/EBITDA for the past 12 months, compared to its trailing 10-year average of 12x.

I looked up ITV’s EV/EBITDA ratio and it is currently around 7.5. Over the last 13 years it’s median score was 11.05 and for 2014-2017 the value was always above 11.


Could ITV be a classic value trap?

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#16

Thanks for sharing this – I was thinking of topping up – but now you got be thinking

(Simon) #17

No problem. I am not sure what to make of it. On the one hand ITV does incredibly well with Ben Graham’s value rules as @Gordon pointed out, but also runs the risk of being too good to be true.

Ultimately I guess it comes down to where we think ITV will be in the future. I certainly can’t see it going anywhere as a broadcaster and studio, I suppose what is likely to change is the relationship between traditional television and streaming services. How well ITV competes on that front (and how well it monetises its streaming) is likely to be the decider in my opinion.

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#18

I too was taking a close look at ITV for my high-yield portfolio. Unfortunately, we’re not blessed with options for the media sector in the UK.

In the end, I went with Relx instead. The dividend’s not the best but I prefer its business and I already have some exposure to TV through BT. It’s looking like one of my better decisions so far, I’m up about 12.5% albeit only over six months or so.

It’s hard to put my finger on what puts me off ITV. I suppose the fact that I don’t watch any terrestrial TV’s a big part of it. I’m pretty sceptical about ‘Britbox’ too.

#19

I just purchased it, looks good value to me. Some great drama’s coming through and looking forward to seeing the finale of Hatton Garden tonight.

(Oliver) #20

I read earlier that, ITV have just got the FA Cup rights again, which will increase viewership. Bit on the fence with it at the moment.

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