FUTR Stock: Fundamental and Technical Analysis of UK-based firm

• The stock price of Future PLC has experienced a downfall of more than 80%. See the reason behind the fall.
• The company is making a revenue growth of over 44% CAGR annually 
• The 50 EMA is above the price, see whether the company will rise above or fall down.

Future PLC is a UK-based company that is listed on the London Stock Exchange as FUTR stock. The company is engaged in the business of publishing special-interest consumer magazines and websites and the operation of events in the areas of technology, games and entertainment, music, knowledge, creative and photography, field sports, and home interest.

Financial analysis of Future PLC.

Starting with our good old profit and loss statement, The annual reports are seen with growing revenue. 5 years back., in 2018, the revenue was £130 M which will become over £825M in 2022. This is a Compound annual growth rate of 44.6% which is an impressive figure in any relation. 

The company in 2022 has made up a gross profit of £354M with a gross margin of 42%. Moreover, after the operating costs of £158 M, the company is left with an operating margin of 23%. The thing to note here is that the company doesn’t disclose its operating cost allocation well enough in its annual reports.

Furthermore, after paying taxes the company has shown a net profit of £112 M which is 15% of the total revenue. This enabled the company to pay up a dividend yield of 0.26% (highest in the last 8 years) and a dividend payout percentage of 4.72%. Furthermore, this increased net profit has impacted Returns on equity, The ROE has increased to 13% for 2022 which is decent if compared to 4% in 2018.

Balance sheet and cash flow statement

Looking at the balance sheet the company is seen to be making regular investments in the long term investments and assets such as net property plant and equipment. On the other hand, the management is focused on increasing short-term investments and cash. The cash has increased from £6 million in 20187 to over 

£500 Million in 2022. A cash-rich company always has advantages during times of unsystematic risks in the economy

Looking at the liabilities side of the balance sheet we can see the long-term debt of over £500 in 2022, which increased the Debt-equity ratio to 0.49. However, the company has enough retained earnings and cash piles to quickly brush off this debt.

Looking at the cash flow statement which is often underlooked, the cash from operations has grown significantly. After a net negative working capital of -£18M, the company reported its CFO as £202M. Furthermore, in the cash flow from investments section, the company is seen investing regularly as we have seen in the balance sheet as well. This leads to the net cash flow of -£303M as recorded in the 2022 annual report.

The financial analysis of the three statements leaves us with a firm conclusion. The company’s management is focused on the growth of past and present while being net profitable. The company is seen to be leveraging debt to invest in capital expenditures. One of the other confirmations to this point is the reinvestment rate.

At present the company is reinvesting over 95% of its net profits back into the business itself. On the other hand, management is sitting on a big pile of cash and retained earnings that is giving them the confidence to further leverage debt and prepare for unsystematic risks.

Why has the FUTR stock price fallen?

Future PLC has reported a decline in the audience numbers on its public websites like  Marie Claire UK, GamesRadar, etc. On an annual basis, the stock was seen doing good but this reporting by the company itself drove the spotlight to its half-yearly reports where the revenue growth was seen declining slightly. This caused a panic in the price graphs of FUTR stock and it saw a decline by more than 75% since the news came out.

Technical analysis and price prediction of FUTURE stock

The FUTR stock broke its major support during March this year and came down to its 52-week low of £632. After that, the stock is seen coming over its immediate resistance which is now its support level of £733. Moreover, we can see the second support level as per the current price action is being made on £594. Similarly, the resistance levels are £1048 for the immediate resistance and £1195 for the 2nd one.

Past these supports and resistance, some indicators like the RSI are showing a surge in the strength of the bulls. The RSI line spiked up after being in the oversold levels of 38. In addition to this, the Simple moving average line which is at the level of 47 also made a bullish crossover with the RSI back in the end days of August.

Furthermore, the MACD line has made a bullish crossover with its EMA. At present, the MACD line is at -2.0 while its EMA is at -4.3. Meanwhile, the FUTR stock price EMAs, like The 50 EMA have seen rejecting the price levels since it crossed over its resistance back in July this year. At present, the 50 EMA is at the level of £780 while the 200 EMA is at the level of £1082.

Is it worth buying FUTR stock?

Looking from a long-term investment point of view, the ideal investment can be made after the 2023 annual reports. The reason is the slow down in the half-yearly statements. However, the stock is seen making positive profits and over 40% CAGR of revenue growth. 

Looking from a short-term view, the FUTR stock price prediction will be bullish if the bulls can cross past the 50 EMA. An ideal long position can be made if the stock is seen sustaining above the levels of £797. However, if the stock falls short its first support level, A short position can be taken 

Technical levels

Support: £733, £594

Resistance: £1,048, £1,195

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.