NEW YORK (TheStreet) -- Shares of Liberty Global (LBTYA) are up 1.25% to $42.08 after it was reported that Chairman John Malone’s cable group has been among Europe’s hungriest companies, agreeing to $40 billion in acquisitions since last February, according to data from Dealogic.
Now there's speculation it might extend its drive into video content, the Financial Times reports. Having bought a minority stake in ITV last month, it could seek control of the U.K. broadcaster.
Together with sister company Discovery Communications (DISCA), Liberty is also in talks to acquire a 49% stake in Formula One from CVC Capital Partners and Lehman Brothers Holdings.
Liberty had net debt of $41.4 billion at the end of June, equivalent to 4.8 times annualised free cash flow. But although bids for ITV and Formula One are by no means certain, a lack of financial firepower does not seem an obstacle, the Times said.
TheStreet Ratings team rates LIBERTY GLOBAL PLC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LIBERTY GLOBAL PLC (LBTYA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LBTYA's very impressive revenue growth greatly exceeded the industry average of 11.7%. Since the same quarter one year prior, revenues leaped by 50.5%. 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.
- Net operating cash flow has significantly increased by 102.44% to $1,596.30 million when compared to the same quarter last year. In addition, LIBERTY GLOBAL PLC has also vastly surpassed the industry average cash flow growth rate of 13.60%.
- The gross profit margin for LIBERTY GLOBAL PLC is rather high; currently it is at 62.64%. Regardless of LBTYA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LBTYA's net profit margin of -5.43% significantly underperformed when compared to the industry average.
- Although LBTYA's debt-to-equity ratio of 3.72 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.28, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Media industry and the overall market, LIBERTY GLOBAL PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: LBTYA Ratings Report
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