Mediagrif set up for solid fiscal 2017, says Echelon

Mediagrif (Mediagrif Stock Quote, Chart, News: TSX:MDF) ended fiscal 2016 with a quarter that was mixed, but Echelon Wealth Partners analyst Amr Ezzat thinks the company is set up for a solid fiscal 2017.

Yesterday, Mediagrif reported its Q4 and fiscal 2016 results. In the fourth quarter, the company posted a profit of $2.5-million (down from $4.6-million during the same period in 2015) on revenue of $18.8-million, a topline that was 8 per cent better than 2015’s Q4.

Ezzat says Mediagrif started slow, but now has momentum.

“After a slow first half of the fiscal year, sales continued to impress growing at 8% y/y, on the back of a FQ316 that saw sales increase 6%. EBITDA was a little lower than our estimate due to one-timers, but nothing to fret about,” says the analyst. “With the ASC acquisition now closed (Acquisition Note), MDF’s F2017 is shaping up to be a solid growth year with sales/EBITDA forecasted to grow at 7%/8%. With significant FCF generation, we see EPS growing at low teens aided by buybacks and financial deleveraging. With the shares trading at 10% NTM FCF yield, we continue to think this is an opportunistic time to accumulate a position in a solid operator.”

In a research update to clients today Ezzat maintained his “Buy” rating and one-year price target of $22.50 on Mediagrif, implying a return of 45.3 per cent at the time of publication.