Business information and media group Centaur Media (CAU) is seeing an improvement in earnings quality and looks set for a strong 2015. Despite a recent rally this is not yet fully reflected in its valuation.

An 11 November trading update revealed, on a year-on-year basis, underlying deferred revenues up 17%, exhibition forward bookings up 6%, and annualised contract values associated with the group?s digital subscription revenues ahead by 32%. All of these are pointers to a strong 12 months to come and could be a prelude to earnings upgrades - with the group, which owns brands and products like Money Marketing and Platforum, describing the outlook as ?increasingly positive?.

SmallCaps Centaur

Under chief executive officer Andria Vidler, who joined in November 2013 from EMI Music UK & Ireland, the business has increased its focus on events, digital and paid-for content platforms, creating a higher quality mix of recurring revenues and earnings and reducing its reliance on more volatile advertising revenues. November?s update revealed aggregate revenue growth across paid-for content and events outstripping declines in advertising.

Based on a Numis? 2015 forecast earnings per share of 4.9p the shares trade on a price-to-earnings ratio of 12.8. The broker has the group on a free cash flow yield of 6.6% and its cash generative nature lends confidence to a generous forecast yield of 4.8%.

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Issue Date: 11 Dec 2014