Should You Buy oOh!media Limited at This Price?

What happened to the OML share price?

oOh!media Limited [ASX:OML] picked up another 2% in today’s trading. The Aussie market moved higher in morning trading, but gave back gains in the afternoon. OML has been a stock on ‘explosive’ growth over 2015, and its stock performance has reflected that growth.

Why did OML shares do this?

OML is a relatively new addition to the Aussie stock market. The company is in the advertising space, which is a ‘hot’ area for Australia. There are a number of advertising stocks that have been doing great in recent months. And they are not your average media companies that distribute content. If you are an investor searching for stocks in the media sector, advertising companies can be a good place to start.

OML is not a ‘secret’, by which I mean it has already been discovered by many momentum and growth investors. The company has a price to earnings ratio of almost 39 times. This is a very high level, and it prompts questions on the sustainability of its pricing.

The company has been growing at double digit rates in both revenue and earnings per share over the past five years. Its margin is respectable. It pays a dividend. It has low debt and plenty of liquidity. Overall, it is a growth company that investors tend to love.

What now for OML?

Is OML too high in terms of P/E multiples? One can argue so. But it is still good stock to have for the active investor. Will OML see a correction at some point? Yes, if its momentum continues to build disproportionally relative to its earnings. Again, OML may not be a long term investor’s game; it may be for the much more agile, active investors.

You should definitely pay attention to this stock if you are thinking of investing in the media sector.

Ken Wangdong
Emerging Market Analyst, Emerging Trends Trader


At Money Morning our aim is simple: to give you intelligent and enjoyable commentary on the most important stock market news and financial information of the day - and tell you how to profit from it. We know the best investments are often the hardest to find. So that's why we sift through mountains of reporting, research and data on your behalf, to present you with only the worthwhile opportunities to invest in.

Become a more informed, enlightened and profitable investor today - by taking out your free subscription to Money Morning now.


Money Morning Australia