Shares in digital media group S4Capital (SFOR) leapt 40% after it upgraded its FY25 earnings guidance. Trading in the final part of last year was ahead of forecasts, meaning results will beat previous estimates.
| Share price: 27.2p (+40%) | PE: n/a |
| Market cap: £181m | Yield: 3.2% |
EARNINGS ‘ROLLERCOASTER’
On 24 November, S4Capital cut its operating profit guidance due to lower project-based revenue and ‘continued client caution’. At the time, it forecast EBITDA of around £75 million against a consensus of £81.6 million.
The shares dropped 2p or around 12% to 15.7p on the news and bumped along at 16p during December. They perked up quite sharply just days before New Year’s Eve, however, with no obvious explanation.
Today, the firm has announced FY25 revenue and EBITDA will be above the latest consensus. Like-for-like revenue is seen down 8.5% instead of 10% while the EBITDA margin is seen at 12%.
Moreover, net debt is expected to be below the £133 million consensus and the £100 million low estimate. This follows a change in Treasury management and a strong focus on working capital.
Executive chairman Martin Sorrell said it was ‘good to see both delivery beyond revised net revenue and operational EBITDA guidance and the significant improvement in liquidity’.
Clearly things in the media business can change at short notice as the profit warning two months ago shows. Somehow, revenue picked up sharply in the last few weeks of 2025 and now everything looks rosy again.
We aren’t big fans of the media agencies, for various reasons including competition and the advent of AI. We also don’t have the constitution for stocks which can move up or down as sharply as S4Capital. The 27% pop between Christmas and New Year could do with explaining, too.
Read the press release here: https://www.s4capital.com/investors
Read related news here: https://sharesify.com/bid-chat-lifts-laggard-wpp/
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