A steady as she goes trading update from newspaper publisher Daily Mail & General Trust’s (DMGT) helps lift the shares 3% to 629.5p.
As we discussed in an article previewing this news, sentiment had been weak after a November 2017 profit warning which wiped off nearly 25% of the company’s market cap.
TRADING RELIEF
Trading has not deteriorated any further in its first quarter running to 31 December with a solid performance delivered and the outlook unchanged.
Revenue was down 6%, though this mainly reflected disposals and the impact of a weaker dollar on its business-to-business division, on an underlying basis group sales were up 2%.
The consumer media group continues to decline as revenue growth from ads on the MailOnline site failing to offset the continuing print advertising and circulation hit faced by titles such as the Daily Mail.
INTERNET USERS FALL
There may also be some concern that the number of average monthly users of MailOnline actually fell 10% to 202m with daily users also down 5% to 13.7m.
Investec analyst Steve Liechti reiterates his ‘buy’ recommendation and 780p price target. He says: ‘We still see good value and look for management to deliver better strategic articulation of the “plan”.
'Forecast attrition has taken its toll but we see numbers as realistic after the last, heavy reset at the full year stage (earnings per share down double digit).’
Based on Liechti’s current forecasts the shares are trading on a price to earnings ratio of 14.4 and a dividend yield of 3.6%.
