Edison Themes: Emerging markets – Worthy of consideration

It may still be early days, but there are glimpses of positivity in the media sector performance numbers. The FY23 results season came in broadly as expected. There were fewer revisions to current year expectations during Q124 than there had been in Q423, implying that management outlook statements have not led to any substantive rethink on corporate prospects. The data are inevitably skewed by the scale of Alphabet and Meta in the North American region and the rebound in margins for these two stocks colours the overall mood. This slight brightening of prospects extends to the UK market. In our last edition of MediaWatch, there was just one stock with positive free cash flow trading above its long-term average ratio of EV/EBITDA (Next 15 Group). As at the date of this report, that number has increased to five, with a median discount of 30%, indicating that there may be plenty of value remaining on the table.