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Fluent: Well-Spoken in Digital Marketing
11/20/2020 5:00 am EST
The company delivers data and performance-based marketing executions to approximately 500 consumer brands, direct marketers and agencies across a range of industries. Revenues grew 21% in third quarter of 2020 to $78.3 million from $64.6 million in the same period last year.
This growth is attributed to strong demand from the company’s media and entertainment segment, including gaming apps and streaming services.
Net income and earnings before interest and taxes (EBIT) have been in an uptrend for the past three years, continuing higher despite the global pandemic. The recent shift in net income and EBIT is great for shareholders as it will help create value in the years to come.
Fluent is a growth stock but has created an abundance of value for shareholders over the years. Book value grew to $2.83 in its most recent quarter, making it undervalued relative to its price per share of $2.67.
Its P/E ratio of 70 is misleading due to the GAAP net income and does not accurately represent its earnings growth. The company’s non-GAAP P/E ratio is 10.7, which is lower than that of its competitors.
Its price/sales (P/S) ratio of 0.7 is attractive for long-term investors considering its recent sales growth. The industry average P/S ratio is 1.3, showing a severe undervaluation.
Overall, the company’s sales and increasing book value make it an appealing value investment compared to other digital marketing firms.
Insiders currently own 46% of the outstanding shares and purchased 74,870 shares in 2020. Insiders have not sold any shares and institutional ownership has maintained despite the big pullback earlier in the year.
Institutional investors own 30% of the outstanding shares and 56% of the float. There are 82 institutions currently holding FLNT, five of which own over one million shares.
A stock trading under $3 and its book value with high institutional ownership is rare. This should help drive its stock price higher in the future as long as it can maintain healthy financials.
Early indicators for the fourth quarter are still pointing to a seasonal lift in holiday shopping patterns. The company’s media and entertainment vertical has been growing rapidly in 2020 and has not shown any signs of slowing down.
Media spending on mobile platforms is expected to be the fastest growing segment of media spending into 2022. Further, marketers are increasing their focus on tracking consumer behaviors across channels and devices.
With individual and industry outlook remaining solid despite the global pandemic, FLNT is in a great position to capture more market share.
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