Future (LSE: FUTR) is an award-winning global multi-platform media company founded in 1985. The company publishes more than 50 magazines in a multitude of different fields, including video games, technology, photography and music. Some of its brands include TechRadar, PC Gamer, Tom’s Guide, Live Science, Android Central and Cyclingnews.com.
A strong performance in 2019, driven by multiple mergers and acquisitions, saw Future enter the FTSE 250 Index as a publicly listed company. On top of this, the firm has experienced astronomical growth over the last five years, with the share price increasing by 1174.44%. Additionally, revenue increased by a whopping 70% from 2018 to 2019 with the amount of online users rising by 55.2% over the same period. If you had invested just £500 in December 2018, it would have been worth £1135 one year later. That’s an increase of 127%!
However, since 30th January, the share price has fallen by around 22.5%. Couple this with a pitiful dividend yield of 0.08% and a forward price-to-earnings ratio of 25.9 and you may be wondering why anyone would consider buying at this time. But, it is worth noting that this recent tumble is primarily in response to Shadowfall Research’s announcement that it would be short-selling the stock, arguing that it is overvalued. This leaves two questions: is the stock truly overvalued? Or is now the perfect time to grab a bargain and buy shares in Future?
In the first week of February, the publishing and media company updated the market on the four-month period ended 31st January, reporting that it had continued to see “strong” momentum in the year-to-date. The firm outlined that it had continued to grow its audience numbers within the media division. In a concluding statement, the directors of Future said that “the board now expects the outcome for the full year to be materially ahead of current market expectations, despite some uncertainty in the macro-economic environment”. This backs up the notion that Future operates a unique and exceptional business strategy, which accounts for the high levels of customer loyalty it experiences.
In addition, Future’s profits outlook remains strong, with an audience reach of over 260 million worldwide and hugely diversified revenue streams that are driven by high levels of organic growth. On top of this, the company is expanding rapidly in America where revenue almost tripled from 2018 to 2019, 51% of which was organic. These factors indicate that there is still plenty of room for more growth, especially thanks to a big market opportunity in America where Future should continue to grow exponentially.
Overall, Future operates an effective and innovative business strategy with an exceptional balance sheet. Factor in the current dip in price and I believe that now is an ideal time to buy shares in Future and hold them for the long term.
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Matthew Dumigan does not own any of the shares in the stocks mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.