Sunday, 10 February 2013

Comment on Glacier Media: A media stock that's worth buying. Really., by Norman Rothery

Glacier Media gets no press.  This is of course ironic, since it produces a lot of it, and in multiple channels.  Recently, however, the off-the-grid company was the subject of a piece by Norman Rothery on the Globe and Mail's website.  The article has a number of strengths.  The writer points out that Glacier Media now sports an attractive 4.3% dividend yield; he explains the lack of interest in the stock by noting how thinly traded it is, which precludes many large investors from forging a position; and he offers an interesting and telling anecdote about Tim McElavine, who I've recently commented on here.

The article has two weaknesses, though.  First, in making a case that the company is undervalued, Rothery cites Glacier's earnings per share, and notes that it compares favorably to the stock price.  However, because of large amortization expenses from past acquisitions, free cash flow is a more accurate estimation of earning power, and is significantly higher than EPS.  Secondly, he fails to emphasize the basic difference between Glacier's community newspapers, which largely enjoy natural monopolies in local markets, and larger newspapers, which have weaker competitive positions.

Glacier's shareholders will be happy that the company's story may finally be starting to spread; however, it's a better tale even than some fellow shareholders know. 


Here is my investment analysis of Glacier Media.

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