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Nine Entertainment Co. Holdings Limited (ASX: NEC): This media company has a 5-year average EBITDA margin of over 20%

Wed 31 May 23, 09:00 AM |

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Nine Entertainment Co Holdings Ltd (ASX: NEC) shares have underperformed the ASX benchmark S&P/ASX 200 index in the recent past. Over the last one month, the shares of this media company have fallen 8% as compared to 3.3% decline in the Australian equity benchmark. One reason behind this underperformance could be its 1FY23 earnings, which seem to have failed to impress market participants. NEC shares have fallen 8.5% since 23 February 2023 (when the company announced its 1HFY23 earnings) till date.

In 1HFY23, while the company's revenues increased by 5% annually to AUD 1,403.3 million, its net profit after tax declined by 16% annually to AUD 190 million. This net profit drop was primarily because of the decline in its EBITDA margin to 26.40% from 30.48% in 1HFY22. But the company's EBITDA of AUD 370 million was broadly in-line with the company's guidance provided in December 2022.

Despite the decline in its EBITDA margin, it is better than its peers in the industry. In the last 12 months ended 31 December 2022 (LTM), its NEC's EBITDA margin stood at 23.85%, which is better than its peers' average EBITDA margin of 21.8%. For this peer comparison, the companies considered are Seven West Media Ltd. (ASX: SWM), ARN Media Ltd (ASX: HT1), and Sports Entertainment Group Ltd (ASX: SEG). Here is how NEC's other LTM financial metrics compare with its peers' median.

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