World Wrestling Entertainment (WWE) stock is trading around $8 versus its 52-week range of $7.44-$10.80, down 20% in the past 1-year. The stock yields 6%. As of June 29th, 2012, the major institutional holders of the stock are Intrepid Capital Management (10%), Royce & Associates (9.6%), Renaissance Technologies (6%), Vanguard Group (5%), and Clearbridge Advisors (3.8%). Additionally, Vince McMahon (CEO) currently owns 39,722,641 shares of WWE's Class B stock (convertible to class A shares). McMahon owns 36,915,261 shares directly and another 2,807,380 through a trust.
Positive fundamentals of the company are: World Wrestling has ample liquidity in the form of $147 million in cash & short-term investments on its balance sheet. Also the company has zero long-term debt.
The company has returned cash to shareholders in the form of dividends. Management paid cash dividends of $26,845 and $38,879 for the nine months ended September 30, 2012 and September 30, 2011, respectively.
Risks associated with investing in the company are: Revenue visibility remains low. Live Entertainment and TV was up 1% in Q3-2012, but it is still too early to determine its long-term impact on the company. Live Entertainment and TV represents 76% of the company's total revenues.
In November, when the company announced Q3-2012 earnings, company raised FY2012 guidance, but largely due to the reduction of costs, and not top line growth.
On a valuation basis, the stock currently trades at a EV/EBITDA multiple of about 7 times, versus its average range of 6-14 times.
Although there are pros and cons to the company's fundamentals, investors should look for better visibility in revenues before adding the name to their portfolio.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.