Future/magazines: print mint


The future is old skool. Future plc, which caters to niche geeks with print publications such as Practical Motorhome, is this year’s best-performing UK stock. Its FTSE 250-listed shares have tripled since the beginning of the year; compare that with the trendier millennial (and canine) friendly Metro Bank whose shares have nosedived. Results published by Future on Friday justify the hype. Operating profits tripled on sales that nearly doubled in the year to September.

It may sell boomer titles and physical magazines but the bulk of Future’s earnings are generated online. Almost three-quarters of sales came from ecommerce and digital advertising last year. Old school it may be but it is ahead of even Silicon Valley giants in spinning media into ecommerce: every time readers click on a link to make a purchase, commission fees drop into Future’s P&L.

Digital income is set to grow following the purchase, announced in October, of TI Media. For a newsagent-style price of £140m, or five times last year’s ebitda, Future picks up a stable of established titles including women’s magazines such as Marie Claire and Woman’s Weekly. These generated revenues of £210m, three-quarters of which came from magazines.

By putting more of these online, Future should be able to lift earnings per share by at least a third by 2021, calculate analysts at Berenberg. More could follow. Using £100m of fresh equity to help pay for TI keeps Future’s leverage below its 1.5 times target, leaving headroom for more acquisitions.

A muted reaction from shares to upgraded guidance suggests the bull run is coming to an end. The shares are now trading at 30 times forward earnings, nearly 60 per cent more than its four-year average. Future must continue to supplant dwindling print revenues with growing online ones at its new acquisition. Until then, sit back with a copy of Golf Monthly.

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