Manchester United (MANU) up slightly after earnings beat

in EARNINGS/INVESTING IDEAS by

Manchester United plc (NYSE:MANU) reported Q1 earnings results on November 18, 2019. The company 1Q Fiscal 2020 Revenues of £135.4 million, adjusted EBITDA of £34.8 million, and small operating profit of £11.0 million. Analysts were projecting a loss of the quarter so stock is up 1.42% on the earnings and revenue surprise.

Ed Woodward, Executive Vice Chairman, remarked, “We have a clear vision in terms of football philosophy and recruitment. The significant investments that we have made in recent years in areas such as transfers, recruitment infrastructure, analytics and our Academy are already beginning to bear fruit. We are very proud to be shortly approaching a milestone 4,000th game featuring an Academy player, and we are particularly optimistic regarding the considerable young talent currently coming through. Our ultimate goal is to win trophies by playing exciting football with a team that fuses graduates from our Academy with world-class acquisitions.”

For the full 2020 fiscal year, management did not adjust expectations. The company continues to expect revenues to be in a range of £560 to £580 million and total adjusted EBITDA to be in a range of £155 to £165 million.

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2019 -$0.15 -$0.17 NM Missed
Q3, 2019 $0.02 $0.06 150.5% Beat
Q2, 2019 $0.29 $0.36 25.6% Beat
Q1, 2019 -$0.06 $0.06 NM Beat
Q4, 2018 $0.01 -$0.01 NM Missed
Q3, 2018 -$0.03 -$0.05 NM Missed
Q2, 2018 $0.14 $0.12 -7.9% Missed
Q1, 2018 -$0.03 $0.05 NM Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by falling by -3.4%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-09-24 $17.24 $16.65 -3.4% Decline
2019-05-16 $18.48 $19.04 3.0% Increase
2019-02-15 $19.20 $19.50 1.6% Increase
2018-11-15 $21.80 $20.86 -4.3% Decline

Fundamentals And Technical Analysis

Manchester United is currently trading at $16.51/share, up 1.7% for the day. The company is trading at approximately 74% of its 52 week high of $22.40/share. The company’s 14 Day Relative Price Index (RSI) of 44.68 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 109.7x.

Manchester United’s current share price also implies a price-to-book (P/B) multiple of 5.0x. The following table summarizes some other key fundamental ratios:

Data as of November 17, 2019
Metric Value
Last Fiscal Period FY2019.Q4
Period End Date June 30, 2019
Stock Price (Current) $16.24
P/E Ratio 109.7x
P/E Ratio (Fwd) -2,070.9x
PEG Ratio 1.7
Total Debt to Capital (%) 19.9%
Levered Free Cash Flow $231 million
Enterprise Value / EBITDA 12.2x

Company Profile: Manchester United plc

Manchester United plc is a mid-cap stock with a market capitalization of $2.673 billion and a total enterprise value of $2.934 billion. The company operates in the Communication Services sector and Entertainment industry.

Manchester United plc owns and operates a professional football club in the United Kingdom called Manchester United Football Club. It develops marketing and sponsorship relationships with international and regional companies to leverage its brand.

The company also markets and sells sports apparel, training and leisure wear, and other clothing featuring the Manchester United brand; and sells other licensed products, such as coffee mugs and bed spreads featuring the Manchester United brand and trademarks, as well as distributes these products through Manchester United branded retail centers and e-commerce platforms, and through the company’s partners’ wholesale distribution channels.

In addition, it distributes live football content directly, as well as through commercial partners; broadcasts television rights relating to the Premier League, Union of European Football Associations competitions, and other competitions; and delivers Manchester United programming through MUTV television channel to territories worldwide.

Further, the company offers a direct to consumer subscription mobile application in 167 territories; and operates Old Trafford, a sports venue with 74,989 seats. Manchester United plc was founded in 1878 and is based in Manchester, the United Kingdom. Manchester United plc is a subsidiary of Red Football LLC.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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