Commercial radio audience surveys have traditionally required participants to keep a daily written log of listening activity. Now, the leading U.S. provider of survey statistics has devised an easier way. Listeners can just carry a cellphone-sized device that detects inaudible program codes and records the data automatically.
Arbitron (NYSE: ARB) is a media and marketing information company. The firm surveys radio listeners in some 300 U.S. markets, gathering information about listening habits, income, lifestyles and shopping habits. More than 4,600 radio stations and 2,100 advertising agencies subscribe to its services. Arbitron also offers market research to cable TV, internet and outdoor advertising clients. The company has developed the Portable People Meter system, a new technology for commercial radio ratings which will replace its current diary-based system with passive, electronic measurement. Plans call for the PPM to be deployed in the Top 50 radio markets by 2010.
Investors were pleased last week, when Arbitron reported Q3 EPS of 58 cents and revenues of $96.5 million. Analysts
had been looking for 57 cents and $96.6 million. Management also guided FY07 EPS to $1.35-$1.45, versus Street consensus of $1.41. C.L. King subsequently upgraded the shares to "accumulate." The stock popped on the news and passed into the initial stage of a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.
Altogether, brokers recommend the shares with two "strong buys," four "buys" and two "holds." Analysts expect a 21% average annual growth rate through the next five years. The ARB Operating Margin (18.23%), Return on Assets (21.02%), Return on Investment (42.94%) and Return on Equity (59.90%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $40.56 and $55.63. A stop-loss of $43.30 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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