Martha Stewart Living Omnimedia (NYSE:MSO) isn't what it used to be. Martha's house arrest, missing analysts estimates, and now suing Sears (SHLD) has driven the stock down 50% in the last year. So now that it's half of what it used to be, the Masters think it's worth a look.
Even if you can't stand Martha (like me) you can't argue with a $538 million media and merchandising company that profits from everything she does. Even her website, http://www.marthastewart.com/ is impressive which has links to everything Martha that reaches over 3.3 million U.S. monthly unique visitors (we get about 12 people at the theStockMasters.com).
Sears Canada Inc. has paid about $1.73 million to Martha Stewart Living Omnimedia Inc. to settle a dispute over royalties, but the home diva's company says it's owed more. I can't think of anyone challenging my personal hero Sears Holdings CEO Eddie Lampert, but her company is all over it. Martha Stewart Living says the $1.73 million payment isn't enough. The company says in an amended court filing that the applicable exchange rate on Nov. 8 was one Canadian dollar equals $1.0939, so Sears Canada was obligated to pay $1.99 million, resulting in a "shortfall" of $260,443.94.
But what's not to like about Martha Stewart Living is the lack of profits, which is the real reason the stock has been tanking the last year.
In 2005 net income was a -$75.8 million, 2006 it improved to -$17 million and thus far in 2007 we are at -$4.1 million. Fellow Masters, the bottom line is improving and as much as you may hate watching her TV show, her company run by Charles Koppelman is coming back to life.
The list of products that Martha's company sells is endless, books, magazines, food, cooking crap, radio shows, and on and on. Martha's name and face are on more goods that Star Wars junk, and that's a ton of crap to sell. Yes I view it all as crap, but that crap is a big business. Just because most American guys don't give 2 cents, doesn't mean that American ladies don't care, they love Martha.
Martha's company is a George Lucas Merchandising dream come true but it's her publishing division that is the big money maker:
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2007 |
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2006 |
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2007 |
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2006 |
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REVENUES |
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Publishing |
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$ |
46,215 |
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$ |
36,258 |
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$ |
134,311 |
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$ |
113,433 |
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Merchandising |
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10,951 |
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11,895 |
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34,904 |
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34,313 |
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Internet |
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3,270 |
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2,827 |
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11,983 |
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10,409 |
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Broadcasting |
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8,820 |
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10,070 |
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28,208 |
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33,148 |
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Total revenues |
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69,256 |
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61,050 |
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209,406 |
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191,303 |
Forget about the debt for just a second and consider that year of year this company is dramatically improving net income and as Martha's face is plastered on more goods everyday, the revenue potential is growing.
It will peak of course, but the stock has taken a beating, and I think we'll see MSO bottom out at $9 a share. Then watch the analysts come in and say 'it's trading at a discount given the current and future revenue stream, blah, blah, blah".
Love her or hate her, her company is making money and the share price will return back to the $20's in 2008.
