Future PLC (LSE:FUTR) has been hit by a slowdown in the US, which contributed to a 19% drop in profitability.
Shares in the mainly online publishing group tumbled 20% in early trade as investors digested the full-year results, the updated guidance (of low-single-digit top-line growth), and the news that chief financial officer Penny Ladkin-Brand is leaving the business after eight years.
In the 12 months ended 30 September, revenues were down 4% to £788.9 million, giving pre-tax profit of £138.1 million.
Digging down, sales in the US were off almost a fifth, a result ascribed to the "softness" of the market there.
In a bid to turn around fortunes, Future is investing £25-£30 million to grow its audience, diversify and increase revenue per user and optimise the portfolio.
"Longer-term, we are confident that our diversified strategy will continue to deliver significant value for shareholders, with our investment in our new content verticals and capabilities underpinning our growth ambitions and with our strong cash generation giving further optionality," investors were told.
The stock, off 55% in the year to date, fell 153p to 599p in the early exchanges.
Analysts see value
Broker Peel Hunt sees value at current levels in the stock, which is trading on a price-to-earnings multiple of just five times.
Stifel likewise said its 'buy' rating on Future is "based on our view that given the high quality and digital leaning of the portfolio of brands, and the scope to drive audiences in new verticals and the US, we expect growth to return to above-market rates once economic headwinds stabilise".
While the update is likely to result in a downgrade to earnings estimates this year, analysts noted that the growth acceleration strategy "seeks to build on the group's strengths and with an expectation of a return on this investment as early as H2 this year, it looks like a fairly measured plan".
Pre-downgrades, the shares traded for 5.4 times 2024 earnings and a free cash flow yield of around 17.5%, at the bottom end of its peer group, "which suggests to us that downgrades in some form were anticipated".