AMCX

Folks,

I was perusing a new beta feature provided to Fool one members earlier this evening. The feature is a screener tool that helps one filter stocks across the Fooliverse based on specified criteria. An example link (for those with access) is below. This particular link shows stocks that exhibit “rule breaker” qualities. I was surprised to see a number of Saul stocks make the list, including one that wasn’t exactly an official recommendation yet but was rather flagged as being in “Research”. Kudos to you Saul for finding another one before the Rulebreaker team.

http://newsletters.fool.com/1255/po/screener?filter=convicti…

I entered a few of the stocks from the screen above into my 1YPEG screen spreadsheet. I also removed most of them as I went along (they didn’t quite make the cut). However, there was one that stood out from the rest and I’m frankly surprised no one has talked about yet.

The company is AMC Networks. Without further ado, here are AMC’s numbers in glorious color:

Revenue


2013		$379	$395	$435
2014	$525	$522	$520	$609
2015	$669

TTM Rev Last Year = $1,734
TTM Rev This Year = $2,320

Earnings


2013		$0.68	$0.83	$0.51
2014	$1.04	$0.90	$0.83	$1.15
2015	$1.76

TTM EPS Last Year = $3.06
TTM EPS This Year = $4.64

First Pass Screen Analysis:

YoY Rev Gain = 34% (Revenue Growth Criteria = PASS)

YoY EPS Gain = 52% (EPS Growth Criteria = PASS)

1YPEG = .35 (1YPEG Criteria = PASS)

Trailing PE = 18 (PE Criteria = PASS)

AMC reports earnings on Thursday morning (8/6).

The last news event came earlier today in the form of an analyst upgrade from Morgan Stanley (from $78->$94 and neutral->overweight).

Does anyone have thoughts on this company? I was a big fan of Breaking Bad, and now enjoy Better Call Saul (which seems oddly apropos here), and believe they have entered into some lucrative deals recently regarding licensing of their content to streaming platforms (Hulu was one if I’m not mistaken).

Anyway, I would love to hear thoughts on this company if you have thoughts to share. I am considering a small entry position tomorrow or Wednesday before earnings are announced just to get my toe wet.

Best,
–Kevin

10 Likes

Hi Kevin,

Your article triggered me to look at this more in detail.
On yahoo finance, I noticed that

  1. This company is leveraged up in last three years… For market cap in ~$6.6B, it has net tangible assets of -$2.3B. So when enterprise value is much higher than market cap. Once you account for this, 1yrPEG may look more reasonable (and. Or so attractive).
  2. Seems like a lot of growth in recent years has come from acquisition, rather than organic growth. This is why analysts forecasting much slower growth going forward.

AMCX certainly could become great investment but it’s not a pure growth company with a long runway which is specialty of this board.

Hope this is helpful.
Nilvest

1 Like

Sorry I meant to say the 1yrPEG may NOT look as attractive.

I’m currently editing a new comedy for IFC, which AMC owns. Seems like they have been focusing on growing the IFC brand with a new commitment to original programming over the last couple of years, rather than just focusing on replaying Indie art-house features.

Shows like Portlandia, Maron, Comedy Bang Bang, Garfunkel and Oates (which was cancelled after one season) a couple other new titles this fall (one of which I hope does amazingly well).

On the AMC side, Better Call Saul and Halt & Catch Fire are both growing franchises with critical acclaim, which will hopefully continue to build and eventually find a large audience much like Breaking Bad and Mad Men did. AMC also recently killed (a year-ish ago maybe) all of their unscripted (reality) shows, again I think this demonstrates their commitment to original, scripted content, which has a longer shelf-life on the streaming services Hulu, Netflix et al.

I like that they pass the Saul test, I like that they are an MF rec and I absulutely connect with their brand. Definitely going to put them on my watchlist.

3 Likes

On the AMC side, Better Call Saul and Halt & Catch Fire are both growing franchises with critical acclaim

So not only is Saul a retired physician and brilliant investor who has made tens of millions of dollars investing in stocks, he recently took up acting as a part time hobby and has a critically acclaimed television show on AMC? What can’t this man do?!

13 Likes

So not only is Saul a retired physician and brilliant investor who has made tens of millions of dollars investing in stocks, he recently took up acting as a part time hobby and has a critically acclaimed television show on AMC? What can’t this man do?!

After all he is the Most Interesting Man in the World! </Dos Equis commercial>

Sorry, I could not resist.

Cheers,
Chris

1 Like