With its stable of 15 million subscribers, DirectTV Group (NYSE:DTV - News), after falling from $16 to $13 a share over a 6 month period, has rebounded to 16.50 a share. Investors are starting to take notice.
In this industry investors are beginning to look more at cash flow and earnings and paying attention to those figures above all others at this time. Direct TV, where News Corp. (NYSE:NWS - News) has a 34% stake, is "an attractive cash-flow play in an environment of slowing profits," according to David Sowerby, portfolio manager at investment firm Loomis Sayles, which has a stake in the company.
Sowerby also says that there should be a doubling of the free cash flow by the year 2008, which would bring it to $2 billion, which would be up from an approximate $875 million this year.
According to sources DTV, which is now being chaired by News CEO Rupert Murdoch, will use a portion of that cash to pay for a $3 billion, two-year buyback of shares which was revealed in February.
There should be an annual rate of revenue growth of 12% to 13% during the next three year period, Sowerby adds. He believes that the stock will reach a high of 21 within a year. They could even go higher than that if DTV's launch of its HDTV and its upgrading of services succeed. Some are saying that they expect that the company will add an additional 1 million subscribers this year.
Some analysts are saying that this company is a buy right now.
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