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Summary

  • Operational Cash Flow for the 6 months ending June 30, 2014 increased to over $2 million vs $1.1 million in the comparable 6-month period from a year ago.
  • The company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $59.1 million and zero debt.
  • This week, Herb Greenberg's status update time stamped his 1-year work anniversary at TheStreet.

On my LinkedIn (NYSE:LNKD) thread this week, my connection Herb Greenberg's status update time stamped his 1-year work anniversary at TheStreet, Inc. (NASDAQ:TST).

A year ago, I recommended TheStreet stock at $2.04 (dividend adjusted) after the company reported FY2013 2nd quarter financials for the period ending June 30,2013 and announced a 25% increase in Free Cash Flow.

Earlier this month TheStreet reported FY2014 2nd quarter financials:

"Revenue in the second quarter of 2014 was $14.8 million, an increase of 9.5% from $13.5 million in the prior year period."

"The Company generated $2.0 million in operating cash flow for the six months ended June 30, 2014, compared to $1.2 million in operating cash flow for the prior year period."

"The Company ended the quarter with cash and cash equivalents, restricted cash and marketable securities of $59.1 million."

Operational Cash Flow for the 6 months ending June 30,2014 increased to over $2 million vs $1.1 million in the comparable 6 month period from a year ago. What makes the increase even more impressive is that company pays a $0.10 dividend, which is nearly a 4% yield at current market prices. In excess of $3 million per year.

There has been a recent shakeup in the online financial sector space:

I believe the TheStreet is a prime acquisition candidate for bigger media entities that would find it easier to buy the subscription distribution base and advertising model of the TheStreet vs. creating and building out their own.

Possible suitors for TheStreet, in my opinion, are:

  • Gannet (NYSE:GCI), as famous as the USA Today newspapers are today, their online financial Money presence is very weak.
  • Comcast (NASDAQ:CMCSA) has high visibility in the financial arena with their CNBC TV programming, but their online presence is weak.
  • Yahoo (NASDAQ:YHOO) has one of the most popular online financial news web sites on the entire web, while its advertising model is tremendous they fail to earn much revenue from a premium subscriber base like TheStreet.

A link to 2007 mergers

  • CBS Marketwatch was acquired by Dow Jones (NYSEARCA:DIA).
  • 2007 Thomson Corp and Reuters Corp merged to become Thomson Reuters Corporation (NYSE:TRI).

The current market capitalization of TheStreet:

  • 34,439,149 shares outstanding
  • closing stock price $2.49
  • Market Capitalization: $85 million
  • total cash & marketable Securities : $59 million
  • Dividend Paid: $3.8 million
  • Debt: Zero

Subtracting the net cash position and annual dividend paid from the entire market capitalization, the underlying company is valued at $22 million.
TheStreet's underlying business in my opinion, (aside from its franchise value) should trade at an operational cash flow multiple of a minimum 25 times $4million = $100 million. In other words, I believe the underlying business which is currently valued at approximately $22 million should be trading 5 times higher at $100 million alone, which would have the common stock valued at nearly $6.00 per share. (Or a total market capitalization of $160 million.)

Equities Research Archives on TheStreet dating back to 2007

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.

Source: TheStreet Reports Higher Sales And Cash Flow For Q2