What's going on with Saga Communications? Two days ago when everyone and their mother was hiding Benjamin Franklin's under their mattress, Ed Christian's Saga Communications was up 4% late in the day. By the closing bell Bank of America and every other Dow component pulled stocks below the red line and Saga finished down a smidge, 1.3%. No big deal considering Spanish Broadcasting was down 58% and Radio One was down 16%. Being down only a tick is a very good day when the market drops like a rock. Yesterday as stocks bounced back, Radio One came back 7%, Entercom 11%, Cumulus 3% and Beasley 1%. Saga was an entirely different story, up $4.65 or 16%. Why?
On August 4th, as he typically does Christian, made his quarterly poetic presentation on his companies earnings. Nothing special about a quarter that was flat. "The map is blinking yellow. There is some green, but there is no red. We're pacing up, but that changes. We have to get used to eating a small plate restaurants. That's the way it will be the rest of the year." Christian even joked during his opening monologue that all the public radio company's should "splice" their statements together because they were predictably consistent.
Christian, like others, said the visibility is "partly cloudy" giving no rosy predictions about the second half of 2011 in his markets. Nonetheless, investors have taken a liking to SGA and it will open today at $33.65, up over 30% year-to-date. Considering most radio stocks are below $10.00, many below $5.00, Christian is the radio's king of the road right now. Or is that king of the street? Saga chugs along with 91 stations and 5 networks in 26 markets.
Saga Communications did get an upgraded by "TheStreet Ratings" from hold to buy. Here was the rational for the upgrade: "The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, notable return on equity and attractive valuation levels. We feel these
strengths outweigh the fact that the company has had sub par growth in net income. SGA's revenue growth trails the industry average of 17.5%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. Compared to its closing price of one year ago, SGA's share price has jumped by 33.88%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year."
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