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Category: Stock Market and Wanda Sports
Date: 9 September 2019 Stock Price: $4.68 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of Wanda Sports, a leading global sports events, media and marketing company.
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About Wanda Sports Group
Wanda Sports Group (NASDAQ: WSG) is a leading global sports events, media and marketing platform with a mission to unite people in sports and enable athletes and fans to live their passions and dreams. Through our businesses, including Infront and The IRONMAN Group, we have significant intellectual property rights, long-term relationships and broad execution capabilities, enabling us to deliver unrivalled sports event experiences, creating access to engaging content and building inclusive communities. We offer a comprehensive array of events, marketing and media services through three primary segments: Mass Participation, Spectator Sports and Digital, Production, Sports Solutions (DPSS). Our full service platform creates value for our partners and clients as well as other stakeholders in the sports ecosystem, from rights owners, to brands and advertisers, and to fans and athletes.
Headquartered in Beijing, China, Wanda Sports Group has more than 60 offices and 1,600 employees around the world.
Headquartered in Beijing, China, Wanda Sports Group has more than 60 offices and 1,600 employees around the world.
Financial overview of Wanda Sports Group's latest earnings report
The numbers we are interested in (for the quarter):
- Revenu: $322.796 million
- Cost of sales: $204.047 million
- Net income attributable to owners: $26.667 million
- Diluted income per share: $0.13
- Diluted number of shares outstanding: 205 million
- Cash and cash equivalents: $212.130 million
- Cash and cash equivalents per share: $1.03
- Cash and cash equivalents makes up 0.94% of Wanda's total assets
- Cash and cash equivalents makes up 22.1% of Wanda's current market capital
- Trade receivables: $273.384 million
- Trade receivables makes up 12.1% of Wanda's total assets
- Inventories: $10.464 million
- Inventories makes up 0.46% of Wanda's total assets
- Stockholders equity: $384.479 million
- Stockholders equity per share: $1.88
- Cash generated from operations: $34.923 million
- Cash generated from operations per share: $0.17
Wanda Sports Group's management commentary on the results and earnings guidance
Mr. Hengming Yang, Chief Executive Officer of Wanda Sports, commented, “We are pleased with our second quarter performance, which reflects the strong business momentum across our three key segments. Compared with the second quarter of 2018, we delivered steady revenue growth and achieved solid profits, excluding the impact of event cyclicality due to the FIFA World Cup. As a leading global sports events, media and marketing platform, Wanda Sports is capitalizing on the tremendous opportunities in the growing sport market globally. Looking ahead, we remain focused on our strategy of adding compelling events in desirable markets, expanding our diversified portfolio of world-class IP rights, embracing digital innovation in the sports industry, making selective acquisitions that have strong synergies with our existing businesses and capturing the significant opportunities in the high-growth Chinese market.
We are confident that continued execution of this strategy will drive growth and create value for our shareholders.” Mr. Honghui (Brian) Liao, Chief Financial Officer of Wanda Sports commented, “In the second quarter, we achieved solid financial performance, with a 4% year-over-year increase in revenues (excluding the impact of reimbursement revenues) and Adjusted EBITDA of €59 million. Our asset-light business model and strong cash flow from operations give us the financial flexibility to invest in new growth initiatives. In August, we used the proceeds from our U.S. IPO as well as cash on hand to pay down short-term debt by US$200 million and reduced our net leverage ratio to 4.2.
We remain focused on executing our strategy while working to reduce our leverage as we position Wanda Sports to deliver long-term value for our athletes, business partners and shareholders.”
Third Quarter and Full Year 2019 Guidance
For the third quarter, we currently expect: Total revenue to be in the range of €239 million to €253 million, or up 5% to 11% year-over-year. Excluding reimbursement revenue, total revenue to be in the range of €236 million to €251 million, or up 30% to 38% year-over-year. Adjusted EBITDA to be in the range of €39 million to €41 million, or down 1% to up 6% year-over-year.
For 2019, we currently expect: Total revenue to be in the range of €1,008 million to €1,070 million, or down 11% to 5% from 2018. Excluding reimbursement revenue, total revenue to be in the range of €976 million to €1,036 million, or up 7% to 14 % from 2018. Adjusted EBITDA to be in the range of €167 million to €177 million, or down 15% to 9% from 2018. Compared with 2018, total revenue and Adjusted EBITDA of 2019 are expected to be lower mainly due to event cyclicality in 2018.
We are confident that continued execution of this strategy will drive growth and create value for our shareholders.” Mr. Honghui (Brian) Liao, Chief Financial Officer of Wanda Sports commented, “In the second quarter, we achieved solid financial performance, with a 4% year-over-year increase in revenues (excluding the impact of reimbursement revenues) and Adjusted EBITDA of €59 million. Our asset-light business model and strong cash flow from operations give us the financial flexibility to invest in new growth initiatives. In August, we used the proceeds from our U.S. IPO as well as cash on hand to pay down short-term debt by US$200 million and reduced our net leverage ratio to 4.2.
We remain focused on executing our strategy while working to reduce our leverage as we position Wanda Sports to deliver long-term value for our athletes, business partners and shareholders.”
Third Quarter and Full Year 2019 Guidance
For the third quarter, we currently expect: Total revenue to be in the range of €239 million to €253 million, or up 5% to 11% year-over-year. Excluding reimbursement revenue, total revenue to be in the range of €236 million to €251 million, or up 30% to 38% year-over-year. Adjusted EBITDA to be in the range of €39 million to €41 million, or down 1% to up 6% year-over-year.
For 2019, we currently expect: Total revenue to be in the range of €1,008 million to €1,070 million, or down 11% to 5% from 2018. Excluding reimbursement revenue, total revenue to be in the range of €976 million to €1,036 million, or up 7% to 14 % from 2018. Adjusted EBITDA to be in the range of €167 million to €177 million, or down 15% to 9% from 2018. Compared with 2018, total revenue and Adjusted EBITDA of 2019 are expected to be lower mainly due to event cyclicality in 2018.
Wanda Sports Group (NASDAQ: WSG) stock price history
The image below, obtained from Google shows the stock price performance of Wanda sports group since their listing towards the start of July 2019. The stock is down about 10% from the levels it listed at earlier in the year. But it is still early days as a listed company for the group.
Wanda Sports Group (NASDAQ: WSG) latest stock valuation
So based on Wanda Sports Group's latest earnings report what are their shares worth? Based on their earnings reported and the fiscal guidance provided our valuation models provide a target price for Wanda Sports Group stock of $8.71. We therefore believe the newly listed stock is undervalued and we expect it to edge upwards towards our target (full value) price in coming weeks and months. But we would caution against buying just yet. Let the group file a few more quarters earnings reports and confidence in the company and their financial results build before jumping in and buying the stock.