| An SI Board Since November 1996 |
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National Media is the world's largest infomercial company. It is a fully integrated consumer products company and the leader in the booming industry of transactional television.
National Media designs and develops products that have promising retail potential, produces an infomercial, outsources the manufacturing of the product, purchases media time, and airs the infomercial. It also controls the order-taking and order fulfillment of the product. Some of its products are sold on QVC and HSN after the infomercial has aired for a while. Some products are distributed to retail stores and mail-order retailers as well, delivering the product through a variety of channels.
Some of National Media's most successful products include the Ab-Roller Plus, Powerwalk, Health Rider, Regal Cookware (Royal Diamond) and Touchless Car Wax. More than half of its revenues come from outside of North America, and its international market is growing rapidly. This makes it less vulnerable to economic changes in the U.S. and other countries.
National Media has continued its strategy of acquiring other premier infomercial producers and establishing alliances with major marketing and service companies. In 1995, the company acquired Positive Response Television (Amazing Discoveries, Ask Mike!) and DirectAmerica, two of the most successful infomercial producers in the world.
National Media is leading the growing trend of home shopping, and has no serious competition. It has made an equity investment in EarthLink Network, Inc., one of the fastest growing Internet access providers, and plans to use the Internet to further expand their worldwide presence.
Projected revenues and EPS for FY ended March 1998 are $500 million and $1.35, respectively. Many analysts expect National Media to maintain growth of at least 30% per year for many years into the future.
Although 1996 has been a fantastic year for the company, it has been a very bad year for the stock. A secondary offering this summer has put pressure on the stock, amid concerns of dilution. In addition, fears about earnings disappointments and the success of future products have contributed to the recent collapse of the stock. NM has been heavily shorted, and the further drop below $10 this past week has been due largely to stop-loss sell orders and margin calls.
Back in May, the stock traded at $21, near its historic high. As of mid-November, NM was down to less than $9 per share. This is an 18-month low. The stock now trades at a P/E of 9 based on FY97 (March 1997) earnings, and a P/E of less than 7, based on FY98 earnings. It currently has a Price/Sales ratio of less than 0.50, based on FY98 revenues. This stock has been unfairly oversold, and I believe that it is tremendously undervalued, considering $30 a fair value.
You can find National Media's press releases at prnewswire.com^1
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