(By Rich Bieglmieir) Let's see if we have this right? Your company reports four consecutive quarters of falling revenue compared to the same quarter, year over year. Fourth quarter sales of $50.9 million were down 11.7%, down 10.8% in the third quarter versus the previous year, and another 3.3% decline Q2 over Q2.
In the most recent quarter, loss widened to $4.1 million – 13 cents a share – jumping from a $2 million – 12 cents a share – versus the same quarter a year ago. Great numbers, right?
Now imagine that you run the company. iStock bets you would be eager to open up the checkbook and jump in, right?
It's sort of like the Ron Artest's three point shot that won the Los Angeles Lakers a NBA Championship a few years back. We can hear the iStock universe, in one collective voice, hollering NOOoooo! Just like the Staples center crowd the night Meta World Peace's shot hit nothing but net.
Like Artest, management at Emmis Communications Corp. (EMMS) is unafraid to take the game winning shot while observers shake their heads in disbelief. Since May 2012, insiders and officers have been shoveling the stock into their personal accounts.
Buying started May 17th at a $1.48 and continued last week at as high as $1.95 per share. From June 13th to the 20th, CEO, Jeffrey Smulyan purchased 384,966 shares, coming out of pocket for nearly three quarters of a million dollars. In total, four insiders bought 2.6 million shares – to our best calculations.
While earnings and sales are screaming - NO! insiders at the country's 8th largest publicly traded radio portfolio see an open shot. Because of a lack of coverage, maybe one analyst following the stock part-time and institutional ownership less than 30%, Emmis' story of deleveraging through divestitures of costly parts, which should open the door to steady, low single digit growth and positive operating margins going forward, remains an open secret.
If the company can return to profitability soon, stem the tide of year-over-year shrinking revenues and profits, as management hopes, then iStock sees no reason for the diversified media company to trade with a price-to-sales ratio of 0.34 while the rest of the industry trades at 1.18.
Since the stock price busted a multiple, ten month top near 90 cents at the end of May, shares have been up, up and away; which really makes iStock wonder about insider buying at or near 52-week highs. On the 10-year, weekly chart, if EMMS can confidently put $2 in the rearview mirror, there isn't much in the way of resistance until the mid-to-high $3s.
For the high $3s to come, iStock believes Mr. Smulyan and the rest of the executive team will have to continue shoring up the balance sheet, something they seem committed to doing.
Right now, the ball is in the air, insiders have squared up to the bucket and released the shot while shareholders watch in slow motion, hoping for the big score.