Global Traffic Network gives up last week’s gains

A recent spike in the shares of media analytics company Global Traffic Network (ASX: GTN) appear to have been short lived, with a minor rise in trading activity this morning suggesting some shareholders were keen to take last week’s gains off the table.

What captured investors’ attention was last Thursday’s trading update, within which the company guided earnings for the half-year to December to $9.75m – $10.25m, up from $7.1m in the previous period.

Within the trading update, GTN noted that revenue within Australia – the company’s single largest market - is on track to climb by 24%.

UK and Brazil markets are also expected to move forward compared to previous period, while the group’s Canada subsidiary is expected to be roughly comparable to the half-year ended 31 December 2021.

Balance Sheet and Capital Management

While GTN’s net profit margins have struggled since covid, the company to its credit has continued to maintain a strong balance sheet and does not foresee any additional capital raising going forward.

The company’s outstanding debt under its bank loan facility was $37m at 31 December 2021.

GTN expects its net debt (debt less cash) to be around $7.5m at 31 December 2021 and expects to continue to be in compliance with all of its debt covenants for the period.

Core business reinvestment

Commenting on the initial results, William L. Yde III, managing director and CEO noted:

“Australia, our largest market, continues to outperform the broader Australian radio market and Brazil sales have increased substantially over the past several months," Yde noted.

“The strong revenue increase has allowed us to reinvest in the core business, which we expect will lead to further revenue and adjusted earnings in the future.”

Consensus does not cover this stock.

GTN gives up last week's gains in early morning trade today