Given the current market environment, The GeoTeam would like to put CCME expectations into perspective.
Normally, we would remove CCME from the GeoBargain list
Based on 2010 guidance, the 2nd Q should be a strong quarter, however dilution will likely impact 2010 3Q and 4Q resulting in EPS growth of less than 30%:
If we take the high end of CCME's guidance of $75.0 million and subtract the first quarter reported net income of $18.1 million, it will report net income of $56.9 million for the remaining 2010 nine months. This works out to about $19.0 million per quarter or EPS of $0.57.
In 2009 we calculated that CCME reported EPS of:
We are not sure how investors will react to such events. Short-term investors may choose to revisit CCME as it enters 2011 when, according to the 2011 net income target of $130 million, consistent EPS growth should resume. (2011 EPS could reach $3.88 based on current shares. This compares to about $2.25 for 2010 if objectives are met).
**Please be aware that the the 2010 net income guidance is below the incentive allocation target of $83.5 million. Investors should take this discrepancy into account if they choose to reference the 2011 net income target when formulating an investment decision. Also, if allocation targets are met, the fully diluted share count will rise.
**CCME also was adamant about not providing a 2010 EPS target during its 2010 earnings call.
The good news for dedicated long-term investors is that:
"CME believes that its existing cash resources, the anticipated cash flows from operating activities, will be sufficient to meet both its short-term and long-term liquidity needs, including capital expenditure requirements to achieve its expansion plans and the potential increase in costs as a result of becoming a public reporting company."
We will make an exception and keep CCME coded as a GeoBargain for long-term investors who are aware of some of the possible short-term "perception" hurdles.
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