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Entercom: Take This Gift From Mr. Market

Mar. 11, 2020 1:55 AM ETAudacy, Inc. (AUDA)42 Comments
WY Capital profile picture
WY Capital


  • The coronavirus is unlikely to have a long-term impact on ETM, even if it does depress revenues  for 1-2 quarters.
  • Management is forecasting revenue and profitability growth in 2020 from strong political ad spending.
  • Growth initiatives in podcasting and Radio.com seem to be working.
  • The valuation is incredibly low, and insiders are scooping up shares like mad.

As investors start fleeing into safe havens, Entercom Communications (ETM) has been hit extremely hard. The stock has been battered to levels not seen since 2008 despite reporting decent results in Q3 and Q4. We believe the current price represents a fantastic buying opportunity for a company that has strong cash flow and is executing well on its growth opportunities.


Recently, the spread of COVID-19, along with a massive drop in oil prices, sent investors rushing out of the riskiest assets - leveraged companies, unprofitable companies, etc. - into safe havens like treasuries, gold, etc. ETM, which had a lot of debt, fell in the "risky asset" category and was sold off.

However, we believe this steep selloff is highly unwarranted. ETM will likely not be affected much by the steep drop in oil prices, and while it is possible that the US could plunge into recession for 1-2 quarters due to COVID-19, we believe the impact will subside by the end of 2020. Most of its debt doesn’t mature until 2024, so even if cash flow is depressed for a quarter or two, ETM should be fine. Recently reported Q4 results were also quite encouraging.

2019 results and outlook

Q4 2019 marks the end of a turnaround year in which ETM completed the integration of CBS Radio, scaled up Radio.com, and became one of the largest podcast companies in the US.

In Q4, both revenue and profitability continued to grow, with revenue up 3% ex-political and adjusted EBITDA up 2% compared to last year. The increase in adjusted EBITDA was mainly due to the $100 million in synergies from the completion of the CBS Radio integration program.

During 2019, we completed the CBS Radio integration program, which generated over $175 million of gross cost synergies and about $100 million of realized net

This article was written by

WY Capital profile picture
Looking out for underrated companies that could shape the future of humanity, or just provide strong returns over the long run. Note that my opinions could change after conducting more research or based on anything, honestly. DYODD

Analyst’s Disclosure: I am/we are long ETM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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