Glacier Media Inc (TSX: GVC) is a Canada based company which offers information and marketing solutions. It operates in three segments Environmental, Property and Financial Information, Commodity Information and Community Media.

Key highlights 

• Healthy outlook: Although market conditions have improved, the pandemic continues to impact the company in the variety of ways. It is attempting to enhance both its financial and operational profitability. Revenues were severely damaged; but, in the second part of 2020 and into 2021, it began to recover. A combination of greater revenues continued cost management, and stronger business conditions in a number of the Company's markets has resulted in significantly higher levels of operational profitability.
• Strong liquidity ratios and leverage Profile: The company’s quick ratio in Q2 2021, stood at 1.25x compared to industry median at 1.11x. The ratio is consistently improving from past couple of quarters shows that company can meet its short-term liabilities comfortably, which is a healthy sign. Moreover, its Debt/Equity ratio stood at 0.06x against an industry median of 1.01x, which is again a positive aspect.

• Strong liquidity position: With a cash and cash equivalents balance of CAD 14.5 million, up from CAD 14.3 million on December 31, 2020, the Company improved its financial position. Furthermore, the Company had no senior debt as of June 30, 2021, but its mortgages and other loans amounted CAD 2.5 million.
  

Financial overview of Q2 2021 (In thousands of CAD)

Source: Company

• In Q2 2021, the company reported higher revenue at CAD 41.0 million revenue, compared to 30.9 million in the previous corresponding period.
• The company's operating profit fell to CAD 4.2 million in the reported period, compared to CAD 6.1 million in pcp. The decrease was mainly due to higher direct expenses, which stood at CAD 27.1 million V/s CAD 17.8 million in pcp.

• Net income in Q2 2021 stood at CAD 0.7 million against a loss of CAD 7.3 million in pcp, although it experienced higher depreciation expense, but no impairment was done in this period.
  

Risks associated with investment

The company derives its revenues from selling advertising and subscriptions related to its publications; a drop in the subscription level can lead to adverse results. Foreign exchange rate fluctuations, the seasonal and cyclical nature of the agricultural and energy sectors, government programs discontinuation, general market conditions in Canada and the United States, changes in the prices of purchased supplies such as newsprint, and cybersecurity risk are among the other risk factors.

Stock recommendation

While the pandemic affected the Company's operations, its digital media, data, and information businesses fared better. In numerous industries, revenues have begun to climb and are continuing to rise. The company takes considerable measures to reduce operating expenses in order to guarantee that its companies can operate well at reduced revenue levels, which is a big plus. In addition, the Company is attempting to maintain appropriate levels of operating income within these constraints, as well as making concerted attempts to enhance revenues, profitability, and cash flow.

On the valuation front, the stock is available at TTM EV/SALES of 0.45x against the industry (Media & Publishing) median of 2.5x. Hence, considering the rationale mentioned above we have recommended a “Speculative Buy” rating in the stock at the closing price of CAD 0.46 on October 22, 2021, with a lower double digit (in percentage terms) upside potential.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached 

Technical Summary Analysis:

One-Year Technical Price Chart (as on October 22, 2021). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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