Reach plc (RCH) AI Stock Analysis

• Market Cap: £173.58M
• Dividend Yield: 11.25%
• Average Volume (3M): 1.87M
• Price to Earnings (P/E): 3.5
• Beta (1Y): 0.97
• Revenue Growth: -4.44%
• EPS Growth: 19.95%
• Country: UK
• Employees: 3,566
• Sector: Communication Services
• Sector Strength: 97
• Industry: Publishing
• EPS (TTM): 0.11
• Shares Outstanding: 318,336,300
• 10 Day Avg. Volume: 1,767,942
• 30 Day Avg. Volume: 1,871,338
• PEG Ratio: 0.03
• Price to Book (P/B): 0.39
• Price to Sales (P/S): 0.49
• P/FCF Ratio: 18.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £68.00
• Price Target Upside: 24.09% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 65 Neutral
• Price Target: 63.00p ▲(14.96% Upside)

Reach plc's overall stock score is driven by its strong valuation, with a low P/E ratio and high dividend yield, making it attractive for value and income investors. However, the declining revenue and inconsistent cash flows present challenges. The technical analysis indicates a bearish trend, which may impact short-term performance.

Positive Factors

Improved Profitability

Improved profitability indicates enhanced operational efficiency and better returns for shareholders, strengthening the company's financial health.

Solid Balance Sheet

A strong balance sheet with low leverage provides financial stability and flexibility, supporting long-term growth and resilience against economic fluctuations.

Positive Free Cash Flow

Positive free cash flow reflects improved cash management, enabling the company to invest in growth opportunities and reduce reliance on external financing.

Negative Factors

Declining Revenue

Declining revenue poses a challenge to sustaining profitability and growth, potentially impacting the company's market position and long-term prospects.

Inconsistent Cash Flow

Inconsistent cash flow growth can hinder the company's ability to plan and invest strategically, affecting long-term financial stability and operational efficiency.

Decreased Gross Profit Margin

A declining gross profit margin indicates increased cost pressures and reduced pricing power, which can erode profitability over time if not addressed.

Reach plc Business Overview & Revenue Model

Company Description

Reach plc operates as a national and regional news publisher in the United Kingdom and Ireland. The company has various national and regional brands across print and online, including HullLive, DerbyshireLive, belfastlive, BristoLive, football.london, Devon Live, TeessideLive, edinburghlive, Mylondon, Corkbeo, Dailystar, Mirror, Daily Express, Daily Record, ChronicleLive, OK!, ECHO, LeicestershireLive, Manchester Evening News, and BirminghamLive. It is also involved in the publishing and digital classified recruitment business. The company was formerly known as Trinity Mirror plc and changed its name to Reach plc in May 2018. Reach plc was incorporated in 1904 and is headquartered in London, the United Kingdom.

How the Company Makes Money

Reach plc generates revenue through a diverse range of streams, primarily from the sale of advertising and circulation. The company's advertising revenue comes from both print and digital formats, with a growing emphasis on digital advertising as audience engagement shifts online. The digital transformation has led to increased investments in online content, including websites and mobile apps, which attract a large number of visitors, thereby enhancing advertising opportunities. Additionally, Reach plc benefits from subscription services, particularly as it develops premium content offerings that encourage reader loyalty and direct monetization. Partnerships with other media platforms and advertisers also play a role in diversifying its revenue sources, while strategic initiatives in content marketing and e-commerce further bolster its financial performance.

Reach plc Financial Statement Overview

Summary

Reach plc presents a moderately strong financial profile with improved profitability and operational efficiency. However, declining revenue and inconsistent cash flows are concerns. The balance sheet is solid with low leverage and a strong equity position.

Income Statement

Reach plc's income statement reflects a mixed performance. The gross profit margin has declined from previous years as revenue has decreased while costs have increased slightly. The net profit margin improved significantly in 2024 due to a substantial increase in net income, though revenue growth has been negative over the recent periods. While EBIT and EBITDA margins have improved, indicating better operational efficiency, declining revenue is a concern.

Balance Sheet

The balance sheet shows a stable financial position with a solid equity base and a manageable debt level. The debt-to-equity ratio is low, suggesting conservative leverage. The equity ratio is healthy, indicating a strong equity position relative to total assets. Return on equity improved significantly in 2024, showcasing better profitability and shareholder returns, though it remains sensitive to potential revenue fluctuations.

Cash Flow

Cash flow analysis highlights some strengths and weaknesses. Free cash flow turned positive in 2024 after a negative performance in the previous year, indicating better cash management. Operating cash flow to net income ratio suggests cash generation is adequate, but the free cash flow growth rate has been inconsistent. The reliance on financing activities and past negative free cash flows pose potential risks.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	529.60M	538.60M	568.60M	601.40M	615.80M	600.20M
Gross Profit	231.90M	235.20M	223.90M	225.70M	286.40M	297.00M
EBITDA	87.60M	90.60M	61.40M	106.80M	93.70M	29.00M
Net Income	49.90M	53.60M	21.50M	52.30M	2.90M	-26.70M
Balance Sheet
Total Assets	1.18B	1.21B	1.22B	1.26B	1.34B	1.27B
Cash, Cash Equivalents and Short-Term Investments	16.20M	22.70M	19.90M	40.40M	65.70M	42.00M
Total Debt	62.80M	62.30M	63.20M	46.70M	36.20M	41.60M
Total Liabilities	500.60M	530.90M	582.10M	621.50M	703.70M	707.20M
Stockholders Equity	681.70M	678.60M	637.20M	637.50M	638.80M	566.70M
Cash Flow
Free Cash Flow	25.80M	14.20M	12.40M	7.00M	73.10M	50.70M
Operating Cash Flow	27.90M	26.00M	15.90M	20.70M	85.60M	52.60M
Investing Cash Flow	-9.50M	4.90M	-19.30M	-30.40M	-28.60M	-21.80M
Financing Cash Flow	-17.10M	-30.00M	-17.10M	-15.60M	-33.30M	-9.20M

Reach plc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 54.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RCH, the sentiment is Negative. The current price of 54.8 is below the 20-day moving average (MA) of 55.85, below the 50-day MA of 57.33, and below the 200-day MA of 66.07, indicating a bearish trend. The MACD of -0.83 indicates Negative momentum. The RSI at 43.64 is Neutral, neither overbought nor oversold. The STOCH value of 52.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:RCH.

Reach plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LBG	67 Neutral	£178.55M	22.49	―	―	―	―
RCH	65 Neutral	£173.58M	3.48	7.38%	11.25%	-4.44%	19.95%
SAA	65 Neutral	£153.33M	20.02	18.23%	1.15%	-21.19%	-29.54%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
CAU	56 Neutral	£65.21M	-6.11	-32.35%	4.00%	-13.72%	-361.92%
TMO	50 Neutral	£41.10M	-0.49	-9999.00%	―	-28.98%	-1212.50%
TIG	47 Neutral	£121.38M	-8.75	―	2.06%	-6.63%	-177.14%

Reach plc Corporate Events

Reach plc Reports Mixed Q3 Performance Amid Strategic Restructuring

Reach plc reported a mixed performance in its Q3 trading update, with digital revenue growing by 2.1% despite challenges in direct revenue, while indirect revenue saw a 4.0% increase. Print revenue experienced a decline, but circulation remained stable. The company has restructured to focus on growth priorities, including video production and off-platform audience expansion, with a restructuring cost estimated at £20m. Despite volatility in digital referral volumes and a weak macroeconomic backdrop, Reach plc remains confident in meeting market expectations for the year, supported by resilient print performance and cost management.

Reach plc’s EBT Acquires Shares to Support Employee Plans

Reach plc announced that its Employee Benefit Trust (EBT) has acquired 452,755 Ordinary Shares to manage dilution from share plans, as previously confirmed to shareholders. This move is part of the company’s strategy to support employee share options and restricted share releases, enhancing employee benefits and aligning with corporate governance practices.