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: The Company has seen an improvement in market circumstances in a number of its operations, but the pandemic continues to harm the company in a number of ways. It is trying to improve its financial situation as well as its operational profitability. Revenues were substantially impacted; however, it began to rebound in the second half of 2020 and into 2021. Significantly increased levels of operational profitability have been achieved as a consequence of a combination of better revenues, continuing cost control, and stronger business conditions in a number of the Company's markets.
• 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 improving on a continues basis compared to the last sequential quarters, and it 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 the industry median of 1.03x, which is again a positive aspect.

• Decent liquidity position: With a cash and cash equivalents balance of CAD 14.5 million, which up from CAD 14.3 million on December 31, 2020, the Company has 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, 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 27.13 million V/s CAD 17.89 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 has had an impact on the Company's operations, its digital media, data, and information businesses have fared better. Revenues have begun to rise and are continuing to rise in several sectors. A significant positive is that the company took substantial steps to decrease operational expenditures in order to ensure that its businesses can function successfully at lower sales levels. Furthermore, the Company is trying to maintain adequate levels of operational income within these limits, as well as making deliberate efforts to improve revenues, profits, and cash flow. On the valuation front, the stock is available at TTM EV/SALES multiple of 0.5x against the industry (Media & Publishing) median of 2.6x. Hence, considering the rationale mentioned above, we recommend a “Speculative Buy” rating on the stock at the closing price of CAD 0.47 on September 28, 2021, with a lower double digit (in percentage terms) upside potential.

Technical Analysis Summary

One-Year Technical Price Chart (as on September 28, 2021). Source: REFINITIV, Analysis by Kalkine Group

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

Disclaimer

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