| RTL Group SA (LU0061462528) | |||
36,90 EURStand (close): 01.07.25 |
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| Datum / Uhrzeit | Titel | Bewertung |
| 27.03.25 01:00:25 | RTL Group SA (RGLXF) (FY 2024) Earnings Call Highlights: Resilient Performance Amid Market ... |  |
| Revenue: Slightly up to EUR6.25 billion in 2024. Streaming Revenue: Increased by 42% in 2024. Adjusted EBITA: Decreased to EUR722 million. Adjusted EBITDA: Fremantle's adjusted EBITDA increased to EUR260 million. Total Group Profit: EUR555 million, with EUR428 million from continuing operations. Earnings Per Share: EUR2.97 per share, stable versus prior year. Net Cash from Operating Activities: Increased by more than 40% to EUR761 million. Net Debt: EUR492 million, with a net debt to adjusted EBITDA ratio of approximately 0.4 times. Dividend Proposal: EUR2.50 per share for 2024, representing an 83% payout ratio. RTL Deutschland Revenue: Grew by 1.4% to EUR2.66 billion. Fremantle Revenue: Stable at EUR2.25 billion. Fremantle Adjusted EBITA: Increased to EUR171 million. Streaming Subscribers: RTL+ subscribers up 23% to almost 6.1 million. Operating Cash Conversion Rate: Improved to 102% from 68% in 2023. Warning! GuruFocus has detected 10 Warning Signs with RGLXF. Release Date: March 20, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points RTL Group SA (RGLXF) demonstrated resilience and achieved solid results in 2024 despite a challenging market environment, particularly in Germany. Streaming services continued to grow dynamically, with a 42% increase in streaming revenue and a significant reduction in start-up losses. The German family of TV channels increased its audience lead over competitors and maintained stable TV advertising revenue across the group. Fremantle, the global content business, reached a record result in 2024 with significant overhead reductions and improved operating margins. Strong cash flows enabled RTL Group SA (RGLXF) to propose an attractive dividend of EUR2.50 per share, representing an 83% payout ratio. Negative Points The TV advertising markets in key territories like Germany and France were slightly down or flat, impacting overall revenue growth. Adjusted EBITA decreased to EUR722 million, mainly due to lower profit contributions from Groupe M6. The international market for content production was impacted by the 2023 US strikes and budget cuts from streaming services. The geopolitical and macroeconomic environment remains volatile, making the impact on RTL Group SA (RGLXF)'s business hard to predict. The planned sale of RTL Nederland is still under investigation by the Dutch Competition Authority, delaying the transaction closure. Q & A Highlights Q: Can you provide insights into the first quarter TV advertising environment in Germany? A: Thomas Rabe, CEO, stated that the German TV advertising market was broadly stable in January and February, weaker in March due to Easter, and slightly stronger in April. RTL expects its advertising revenue to be flat for the full year, gaining market share despite a slightly down market. Story Continues Q: What is the rationale behind RTL Group's recent share purchases in M6? A: Thomas Rabe explained that the opportunity arose because M6's audience share dropped below 8%, allowing RTL to increase its shareholding above 50% without a takeover bid. This move is seen as a good investment due to the low share price and is intended to cement RTL's control position. Q: Why is there a margin gap between Fremantle and other production companies like Banijay? A: Thomas Rabe noted that comparing margins is complex due to different accounting practices. Fremantle's EBITDA margin is 11.5%, and when adjusted for accounting differences, the margin gap with competitors is minimal. The exception is ITV Studios, which may have higher margins due to related party transactions. Q: Could you provide updates on advertising trends in France, Hungary, and the Netherlands? A: Bjorn Bauer, CFO, mentioned that France is expected to have broadly stable advertising revenues in Q1, while Hungary is expected to see an increase. The Netherlands was not specifically addressed due to the ongoing sale process. Q: Has the EUR3 billion revenue target for Fremantle been pushed back? A: Thomas Rabe confirmed the target has been delayed due to market dynamics and a selective approach to M&A. The focus has shifted to margin improvement, with AI expected to play a significant role in enhancing efficiency and profitability. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments |
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| 22.03.25 06:02:39 | Can RTL Group S.A.'s (ETR:RRTL) Weak Financials Pull The Plug On The Stock's Current Momentum On Its Share Price? |  |
| RTL Group's (ETR:RRTL) stock is up by a considerable 34% over the past three months. However, in this article, we decided to focus on its weak fundamentals, as long-term financial performance of a business is what ultimately dictates market outcomes. Particularly, we will be paying attention to RTL Group's ROE today. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. How Do You Calculate Return On Equity? Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for RTL Group is: 8.2% = €428m ÷ €5.2b (Based on the trailing twelve months to December 2024). The 'return' is the amount earned after tax over the last twelve months. That means that for every €1 worth of shareholders' equity, the company generated €0.08 in profit. See our latest analysis for RTL Group What Has ROE Got To Do With Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. RTL Group's Earnings Growth And 8.2% ROE On the face of it, RTL Group's ROE is not much to talk about. However, the fact that the company's ROE is higher than the average industry ROE of 5.9%, is definitely interesting. But seeing RTL Group's five year net income decline of 14% over the past five years, we might rethink that. Bear in mind, the company does have a slightly low ROE. It is just that the industry ROE is lower. Hence, this goes some way in explaining the shrinking earnings. So, as a next step, we compared RTL Group's performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 0.9% over the last few years.XTRA:RRTL Past Earnings Growth March 22nd 2025 The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. What is RRTL worth today? The intrinsic value infographic in our free research report helps visualize whether RRTL is currently mispriced by the market. Story Continues Is RTL Group Efficiently Re-investing Its Profits? RTL Group's very high three-year median payout ratio of 102% over the last three years suggests that the company is paying its shareholders more than what it is earning and this explains the company's shrinking earnings. Its usually very hard to sustain dividend payments that are higher than reported profits. Additionally, RTL Group has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Our latest analyst data shows that the future payout ratio of the company is expected to drop to 73% over the next three years. As a result, the expected drop in RTL Group's payout ratio explains the anticipated rise in the company's future ROE to 11%, over the same period. Summary Overall, we would be extremely cautious before making any decision on RTL Group. Its earnings growth particularly is not much to talk about even though it does have a pretty respectable ROE. The lack of growth can be blamed on its poor earnings retention. As discussed earlier, the company is retaining hardly any of its profits. Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 14.02.25 10:14:12 | RTL Group's (ETR:RRTL) three-year decline in earnings translates into losses for shareholders | |
| RTL Group S.A. (ETR:RRTL) shareholders should be happy to see the share price up 29% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. Truth be told the share price declined 40% in three years and that return, Dear Reader, falls short of what you could have got from passive investing with an index fund. Although the past week has been more reassuring for shareholders, they're still in the red over the last three years, so let's see if the underlying business has been responsible for the decline. View our latest analysis for RTL Group To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. During the three years that the share price fell, RTL Group's earnings per share (EPS) dropped by 32% each year. In comparison the 16% compound annual share price decline isn't as bad as the EPS drop-off. So, despite the prior disappointment, shareholders must have some confidence the situation will improve, longer term. The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).XTRA:RRTL Earnings Per Share Growth February 14th 2025 We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our freereport on RTL Group's earnings, revenue and cash flow. What About Dividends? When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of RTL Group, it has a TSR of -23% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments! A Different Perspective While the broader market gained around 22% in the last year, RTL Group shareholders lost 4.4% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.8% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 1 warning sign for RTL Group that you should be aware of before investing here. Story Continues For those who like to find winning investments this freelist of undervalued companies with recent insider purchasing, could be just the ticket. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View Comments |
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| 09.10.24 22:06:36 | RTL Group SA (RGLXY) (H1 2024) Earnings Call Highlights: Streaming Surge and Strategic ... | |
| Revenue: Increased by 2% to EUR2.9 billion in the first half of 2024. Streaming Revenue: Grew by 42% in the first half of 2024. Adjusted EBITA: Slightly decreased to EUR172 million due to higher sports program costs. Total Group Profit: Increased by 31% to EUR173 million, with EUR110 million from continuing operations. Net Cash from Operating Activities: Increased to EUR72 million, including RTL Nederland. Net Debt: Increased to EUR1.1 billion from EUR291 million at the end of 2023. RTL Deutschland Revenue: Up 3% to EUR1.21 billion, driven by higher TV advertising and streaming revenue. Groupe M6 Revenue: Increased by 6% to EUR657 million, mainly due to higher TV advertising and streaming revenue. Fremantle Revenue: Decreased by 5% to EUR957 million, with adjusted EBITA stable at EUR35 million. Paying Subscribers: Increased by 25% to EUR6.3 million across Germany, France, and Hungary. TV Advertising Revenue: Grew by almost 5% across the group. Warning! GuruFocus has detected 5 Warning Signs with RGLXY. Release Date: August 09, 2024 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Streaming revenues grew by 42% in the first half of 2024, with a 25% increase in paying subscribers across Germany, France, and Hungary. TV advertising revenue across the group grew by almost 5%, with RTL Germany outperforming the market. The acquisition of Asacha Media Group and Beach House Pictures for EUR200 million aims to expand the global content business Fremantle. The partnership with Deutsche Telekom and Sky Deutschland is progressing well, enhancing streaming service growth. The planned migration of RTL+ to the Bedrock technology platform is expected to reduce streaming tech costs and create a European champion streaming technology. Negative Points Adjusted EBITA was slightly down to EUR172 million due to higher costs for sports programs, particularly the UEFA 2024 matches. Revenue at Fremantle decreased by 5% due to the impact of the 2023 US writers and actors strikes and budget cuts by streaming companies. Net debt increased to EUR1.1 billion from EUR291 million at the end of 2023, primarily due to dividend payments and acquisitions. The Dutch competition authority's Phase 2 investigation into the sale of RTL Nederland to DPG Media is ongoing, delaying the transaction. Higher content costs, particularly for sports programs, are expected to impact financial performance in 2024. Q & A Highlights Q: Can you give us some indication of advertising trends in your main market? A: Thomas Rabe, CEO: We provided data for the first half of the year, showing significant advertising market share gains in Germany. For Q3, July was down single-digit in Germany, August is expected to be down double-digits due to the Olympic Games, but September is looking positive. Overall, Q3 will be down, but we are hopeful for an uptick in Q4. We expect the German market to be slightly up for the year, with us outperforming the market. Q: What backs your confidence that the RTL Nederland transaction will go through by the end of this year? A: Thomas Rabe, CEO: We are confident based on the market definitions used by competition authorities. DPG Media, the buyer, does not have a market share in TV, so acquiring RTL Nederland doesn't increase their market share. We are cooperating with authorities and expect the deal to be approved by year-end. Q: How does the price of RTL+ compare to competitors in Germany, and is there scope for further price increases? A: Thomas Rabe, CEO: RTL+ is priced at EUR6.99, increased from EUR4.99 last year with minimal churn. It compares well to competitors like Netflix at EUR13.99. We see potential for further price increases as we invest in content and user experience. Q: Can you discuss Fremantle's 2026 guidance and the balance between organic and non-organic growth? A: Thomas Rabe, CEO: Fremantle is in a transition year due to the US strikes and customer buying behavior. We expect 2024 revenue to be around EUR2.5 billion, including acquisitions. We anticipate a 4-5% organic growth rate in 2025 and 2026, aiming for a EUR3 billion revenue target by 2026. Q: What is the strategy for streaming services, and how are you progressing towards profitability by 2026? A: Thomas Rabe, CEO: We are seeing strong growth in paying subscribers, up 25% year-on-year. Streaming revenue increased by 42% in the first half of 2024. We are on track to reach our long-term streaming targets and profitability by 2026, supported by subscription price increases and high demand for advertising. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View comments |
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| 04.10.24 11:12:26 | Is RTL Group S.A.'s (ETR:RRTL) Recent Stock Performance Influenced By Its Financials In Any Way? | |
| RTL Group's (ETR:RRTL) stock is up by 2.6% over the past month. Given that stock prices are usually aligned with a company's financial performance in the long-term, we decided to investigate if the company's decent financials had a hand to play in the recent price move. Particularly, we will be paying attention to RTL Group's ROE today. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits. View our latest analysis for RTL Group How Is ROE Calculated? The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for RTL Group is: 11% = €516m ÷ €4.8b (Based on the trailing twelve months to June 2024). The 'return' is the amount earned after tax over the last twelve months. So, this means that for every €1 of its shareholder's investments, the company generates a profit of €0.11. What Is The Relationship Between ROE And Earnings Growth? We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. RTL Group's Earnings Growth And 11% ROE At first glance, RTL Group seems to have a decent ROE. Especially when compared to the industry average of 8.3% the company's ROE looks pretty impressive. Needless to say, we are quite surprised to see that RTL Group's net income shrunk at a rate of 10% over the past five years. We reckon that there could be some other factors at play here that are preventing the company's growth. Such as, the company pays out a huge portion of its earnings as dividends, or is faced with competitive pressures. As a next step, we compared RTL Group's performance with the industry and discovered the industry has shrunk at a rate of 19% in the same period meaning that the company has been shrinking its earnings at a rate lower than the industry. While this is not particularly good, its not particularly bad either. past-earnings-growth Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). Doing so will help them establish if the stock's future looks promising or ominous. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if RTL Group is trading on a high P/E or a low P/E, relative to its industry. Story continues Is RTL Group Efficiently Re-investing Its Profits? RTL Group's declining earnings is not surprising given how the company is spending most of its profits in paying dividends, judging by its three-year median payout ratio of 89% (or a retention ratio of 11%). With only very little left to reinvest into the business, growth in earnings is far from likely. Our risks dashboard should have the 2 risks we have identified for RTL Group. Moreover, RTL Group has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 77%. Therefore, the company's future ROE is also not expected to change by much with analysts predicting an ROE of 12%. Summary On the whole, we do feel that RTL Group has some positive attributes. Although, we are disappointed to see a lack of growth in earnings even in spite of a high ROE. Bear in mind, the company reinvests a small portion of its profits, which means that investors aren't reaping the benefits of the high rate of return. Having said that, we studied the latest analyst forecasts, and found that analysts are expecting the company's earnings growth to improve slightly. Sure enough, this could bring some relief to shareholders. To know more about the company's future earnings growth forecasts take a look at this freereport on analyst forecasts for the company to find out more. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 17.09.24 08:47:48 | Planned merger of Super RTL, Nickelodeon withdrawn, says German cartel office | |
| BERLIN (Reuters) - German broadcaster RTL and Paramount have withdrawn their bid to merge Super RTL, a children's television network, with Nickelodeon, said the German cartel office on Tuesday. The office said the withdrawal happened after it informed the companies that it intended to prohibit the planned marriage. Super RTL, belonging to Bertelsmann's RTL Group, in April said it had struck a deal to acquire Nickelodeon series in Germany. Under the agreement, Super RTL would have acquired a rights package to bring current and upcoming series from Nickelodeon, owned by Paramount Global, to its television programme. (Reporting by Miranda Murray, editing by Thomas Seythal) View comments |
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| 07.09.24 08:53:05 | Shareholders in RTL Group (ETR:RRTL) are in the red if they invested three years ago | |
| For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term RTL Group S.A. (ETR:RRTL) shareholders have had that experience, with the share price dropping 45% in three years, versus a market decline of about 13%. With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies. View our latest analysis for RTL Group To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). During the three years that the share price fell, RTL Group's earnings per share (EPS) dropped by 32% each year. This fall in the EPS is worse than the 18% compound annual share price fall. This suggests that the market retains some optimism around long term earnings stability, despite past EPS declines. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). earnings-per-share-growth We know that RTL Group has improved its bottom line lately, but is it going to grow revenue? You could check out this freereport showing analyst revenue forecasts. What About Dividends? As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. In the case of RTL Group, it has a TSR of -29% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments! A Different Perspective RTL Group shareholders are down 5.0% for the year (even including dividends), but the market itself is up 7.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 3% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for RTL Group that you should be aware of. Story continues Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of companies we expect will grow earnings. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 11.08.24 07:17:03 | RTL Group First Half 2024 Earnings: EPS: €0.44 (vs €0.48 in 1H 2023) | |
| RTL Group (ETR:RRTL) First Half 2024 Results Key Financial Results Revenue: €2.96b (down 5.0% from 1H 2023). Net income: €69.0m (down 8.0% from 1H 2023). Profit margin: 2.3% (down from 2.4% in 1H 2023). The decrease in margin was driven by lower revenue. EPS: €0.44 (down from €0.48 in 1H 2023). earnings-and-revenue-growth All figures shown in the chart above are for the trailing 12 month (TTM) period RTL Group Earnings Insights Looking ahead, revenue is forecast to grow 4.8% p.a. on average during the next 3 years, compared to a 5.7% growth forecast for the Media industry in Germany. Performance of the German Media industry. The company's shares are down 1.8% from a week ago. Risk Analysis What about risks? Every company has them, and we've spotted 2 warning signs for RTL Group you should know about. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 11.06.24 07:00:08 | Calculating The Fair Value Of RTL Group S.A. (ETR:RRTL) | |
| Key Insights RTL Group's estimated fair value is €26.53 based on 2 Stage Free Cash Flow to Equity RTL Group's €30.20 share price indicates it is trading at similar levels as its fair value estimate The €34.40 analyst price target for RRTL is 30% more than our estimate of fair value How far off is RTL Group S.A. (ETR:RRTL) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by projecting its future cash flows and then discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. There's really not all that much to it, even though it might appear quite complex. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. See our latest analysis for RTL Group The Calculation We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 10-year free cash flow (FCF) forecast 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Levered FCF (€, Millions) €1.35b €605.0m €308.4m €203.2m €155.1m €129.7m €115.1m €106.2m €100.8m €97.3m Growth Rate Estimate Source Analyst x1 Analyst x1 Est @ -49.03% Est @ -34.12% Est @ -23.68% Est @ -16.37% Est @ -11.26% Est @ -7.67% Est @ -5.17% Est @ -3.41% Present Value (€, Millions) Discounted @ 5.1% €1.3k €548 €266 €166 €121 €96.2 €81.2 €71.3 €64.4 €59.1 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = €2.8b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.7%. We discount the terminal cash flows to today's value at a cost of equity of 5.1%. Story continues Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = €97m× (1 + 0.7%) ÷ (5.1%– 0.7%) = €2.2b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €2.2b÷ ( 1 + 5.1%)10= €1.3b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €4.1b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of €30.2, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. dcf Important Assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at RTL Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 5.1%, which is based on a levered beta of 0.962. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. SWOT Analysis for RTL Group Strength Debt is not viewed as a risk. Dividend is in the top 25% of dividend payers in the market. Weakness Earnings declined over the past year. Opportunity Annual earnings are forecast to grow for the next 3 years. Good value based on P/E ratio compared to estimated Fair P/E ratio. Threat Dividends are not covered by earnings and cashflows. Annual earnings are forecast to grow slower than the German market. Next Steps: Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For RTL Group, there are three essential factors you should consider: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with RTL Group (at least 1 which doesn't sit too well with us) , and understanding these should be part of your investment process. Future Earnings: How does RRTL's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every German stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 02.05.24 04:12:12 | At €28.95, Is RTL Group S.A. (ETR:RRTL) Worth Looking At Closely? | |
| RTL Group S.A. (ETR:RRTL), is not the largest company out there, but it saw significant share price movement during recent months on the XTRA, rising to highs of €36.30 and falling to the lows of €28.95. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether RTL Group's current trading price of €28.95 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at RTL Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. See our latest analysis for RTL Group What's The Opportunity In RTL Group? According to our valuation model, RTL Group seems to be fairly priced at around 7.69% above our intrinsic value, which means if you buy RTL Group today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is €26.88, there’s only an insignificant downside when the price falls to its real value. Furthermore, RTL Group’s low beta implies that the stock is less volatile than the wider market. Can we expect growth from RTL Group? earnings-and-revenue-growth Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 46% over the next couple of years, the future seems bright for RTL Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation. What This Means For You Are you a shareholder? It seems like the market has already priced in RRTL’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value? Are you a potential investor? If you’ve been keeping tabs on RRTL, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop. Story continues So while earnings quality is important, it's equally important to consider the risks facing RTL Group at this point in time. To help with this, we've discovered 2 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in RTL Group. If you are no longer interested in RTL Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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