World Wrestling Entertainment (WWE) is an American company that deals primarily in professional wrestling, with major revenue sources also coming from film, music, product licensing and direct product sales. Although the company has multiple revenue streams, it has been struggling in 2015. The stock is down 15% YTD, however I think opportunistic investors should use this pullback as an entry point. The company’s latest quarterly report indicate that the company has better things to offer.
For the 1st quarter FY15, World Wrestling Entertainment reported earnings per share of $0.13, beating the analyst estimate of $0.02 by a large difference of $0.11. Revenue for the quarter was $176.2 million, up $4.75 million than consensus estimate of $171.45 million.
The company reported that network surpassed 1.3 million subscribers at the end of quarter. Adjusted OIBDA was $21 million with an average of 927,000 World Wrestling Entertainment Network-based subscribers. This strong growth was primarily driven by higher than expected pay-per-views
Revolving Credit Facility with Bank of America
World Wrestling Entertainment Studios has bolted on a revolving credit facility value $35 million with Bank of America Merrill Lynch. The treaty arises after a multi-year prosperous run by the production company.
With this fresh agreement, World Wrestling Entertainment Studios presumes to prolong and raise their partnership base, which at present comprises Warner Bros., Lionsgate and 20th Century Fox. The profits of the facility will permit WWE Studios to accomplish further on its key strategy for long-term growth, growing the number of mid-size budgets films, related to The Call and Oculus, on its slate. The resources will also go in the direction of the development of the acquisition slate.
WWE Network
World Wrestling Entertainment Network was announced, permitting customers to stream WWE content for $9.99 per month on 24th of February, 2014. The streaming facility provides scheduled and on-demand content comprising of all 12 pay-per-view events. With a content library of 130,000 hours that is rising at a rate of 500 hours per year, look for the facility to continue to add to the 3,000 hours of on-demand content to interest further paid subscribers.
During the 1st month, there were 495,000 subscribers. On 31st of March, 2015, World Wrestling Entertainment Network had 1.3 M paid subscribers, an upsurge of 166% in the past year.
Future
The drivers of forthcoming progress for the network are numerous. There is instinct merchandise sales brought about only for the reason that after viewing content the store is on the network site. Ad revenue, even though negligible at this time, will increase based on management's assessments of how to be as nonintrusive as probable, but still be able to produce an additional revenue stream. In expending the Netflix model, the company can generate new network series that draw specific segments of the WWE Universe to the network on a weekly basis.
Conclusion
WWE hasn’t lived up to the hype in 2015, however the drop in its valuation is needless. The company’s prospects still look bright and its valuation is attractive. Given the positives, I think WWE is good buy at present valuation.
