ETO – Watching Carefully (25th June 2015)

June 25, 2015 Off By admin

Entertainment One (ETO) – Breakout On The Cards?

As most of you know, I’ve been following the fortunes of Entertainment One for many years. It featured as a case study in my book (Picking Winning Shares), where I introduced it as a post-IPO faller. It has also featured from time to time in our DIY-Investors Portfolios. Recently, I’ve been watching its price action unfold, watching for the resistance (at 361p) to be broken. That breakout looks imminent, as you can see from the graph (below).

ETO Graph (361.0p at the close yesterday – 24th June 2015)

ETO Graph (24th June 2015)

ETO Key Metrics (24th June 2015)

ETO - Key Metrics (24th June 2015)

Full Year Results (released 19th May 2015)

Just over a month ago, ETO released full year results for the financial year ended 31st March 2015. The numbers were pretty impressive, as can be seen in the highlights below…

Strong financial performance

  • Group underlying EBITDA up 16% to £107.3 million (up 11% to £117.2 million on a pro forma basis)
  • Group profit before tax doubles to £44.0 million (up 13% to £88.8 million on an adjusted basis)
  • Diluted earnings per share up 99% to 14.1p per share (up 12% to 23.5p per share on an adjusted basis)
  • Group revenues down 5% (down 4% on a pro forma basis), strong Television performance offset by Film
  • Significantly improved cash conversion from the business, with adjusted free cash flow increasing to £41.0 million (2014: £18.8 million)

If you want to look at the full results, you’ll find them HERE. Take particular note ogf the free cash flow generation – especially in relation to the capitalisation and profit!

As usual, I’d be very interested to know what you think.

Mick (25th June 2015)