Just a week ago this group’s shares were trading at 207p, since when the shake-up in global markets at the start of this week knocked them back over 20% to 168p.
As the markets have started to show some resilience, the shares of Team Internet Group (LON:TIG, OTCQX: TIGXF) have lifted slightly to the current 184p.
At around these levels, risk-tolerant investors should be looking to pick up some cheap stock ahead of next Monday’s announcement of the Interim Results for the six months to end-June.
In mid-May the group reported the delivery of a strong first quarter with earnings growth, with continued confidence in its strategic investments in product innovation, vertical integration, and international expansion.
Those initiatives and its strong foundations are believed to have positioned the group for success, giving confidence that the business will meet market expectations for the full year.
The Business
The company creates meaningful and successful connections from businesses to domains, brands to consumers, publishers to advertisers, enabling everyone to realise their digital ambitions.
It is a leading global internet solutions company that operates in two highly-attractive markets: high-growth digital advertising (Online Marketing segment) and domain name management solutions (Online Presence segment).
The company’s Online Marketing segment creates privacy-safe and AI-generated online consumer journeys that convert general interest online media users into confident conviction consumers through advertorial and review websites.
The Online Presence segment is a critical constituent of the global online presence and productivity tool ecosystem, where it serves as the primary distribution channel for a wide range of digital products.
The company’s high-quality earnings come from subscription recurring revenues in the Online Presence segment and revenue share on rolling utility-style contracts in the Online Marketing segment.
Management Comment
At the time of announcing its latest Trading Update, CEO Michael Riedl stated that:
“I am pleased to report that the emphasis on holistically managing for earnings and cash flow continues to yield substantial benefits. This holds true even as we tailor the growth of our Online Marketing sector to align with our enhanced focus on sustainability and customer experience.
We are laying the strong operational foundations which will best position the Group to go from strength to strength, as we execute on our strategy and deliver attractive returns for our shareholders.
The commencement of trading on OTCQX is another milestone in making the Team Internet success story available to a broader audience and we are excited about further milestones on this journey to come.
Finally, with Shinez joining Team Internet, we now have a robust platform addressing the ‘Awareness’ stage of the advertising funnel, complementing our existing offerings, TONIC and VGL, which focus on ‘Consideration’ and ‘Conversion’, respectively. We now undoubtedly hold the most comprehensive product offering among our peers.
We remain laser-focused on our OM2 vision – Omni Media, Omni Monetisation – and leadership in the carefully targeted markets in which we operate, making us even more resilient as we scale up.”
Analyst Views
Carl Smith and Bob Liao at Zeus Capital consider that the group is well-positioned to take market share with its full suite of unique products.
For the year to end-December they estimate that revenues will rise from $837m to $943m, with adjusted EBITDA of $105.4m ($96.4m), lifting earnings to 28.5c (23.2c) and its dividend to 2.2c (2.0c) per share.
For 2025 they see $1,032m revenues, $115.1m EBITDA, 31.5c earnings and a 2.4c dividend per share.
They conclude that the group is considerably undervalued for its levels of earnings quality, growth and cash generation.
Dan Ridsdale at Edison Investment Research estimates current-year revenues of $984m, $109.8m EBITDA, 27.1c earnings and 2.3c per share dividend.
For next year he has $1,082m revenues, $116.8m EBITDA, 29.0c earnings and 2.5c dividend.
His view is that Team Internet’s valuation remains too low, especially given its track record, prospects and cash generation.
In My View
The impressive Annual Recurring Revenue of this real money machine is what is going to drive not only its corporate growth but also its market value.
Just ahead of Monday’s Interims announcement could be an excellent time for picking up some cheap stock.