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One of the most popular companies in FTSE 250 is something ITV (LSE: ITV). Since its launch in 1955, the broadcaster has become a key player in UK television entertainment.
But July was far from smooth sailing for the company. And the release of its half-year results on July 25 sent the share price down 5%. It is yet to enter the recovery stage, which again fell by 0.6%. But could this be a wise time for investors to consider picking up some stocks?
An overreaction?
Despite taking a hit, the stock still put up a strong performance in 2024. During the year, we increased by 28.3%. It is up 11.7% over the past 12 months. That said, it has lost 28.4% of its value over the past five years.
Its recent crash has, in my opinion, caused an overreaction in the market. Admittedly, not all aspects of the results were positive. For example, the group's revenue fell by 2% while ITV Studios' revenue fell by 13%. However, it was not all bad.
To begin with, the business pinned the weak performance of the Studios until the 2023 US writers and actors strikes. It says this will delay around £80m of revenue in 2024 and 2025. In addition, adjusted earnings before interest, tax, and amortization rose 40% while earnings per share rose 43% to 3.3p.
Net income
There is another reason why I am a fan of ITV shares. That's because the stock has a healthy yield of 6.2%. In line with that, management has set its sights on keeping shareholders rewarded going forward.
Last year, after selling BritBox for £235m, it announced that all of the proceeds would go towards buying shares. As of 30 June, it had bought back £53m worth of shares.
Digital skills
ITV has faced a lot of pressure in recent times from a number of different sources. The decline of conventional radio has been a major threat to its performance. Rising inflation isn't helping matters either, as it has forced ITV customers to cut back on spending.
Along with that, there has been a rise in streaming providers such as Netflix again Amazon Prime. This changed the media landscape and produced a new competition for the likes of ITV.
But the business has been fighting back. And it's doing a good job so far. It continues to make strong progress with ITX, its digital broadcast platform. In the first quarter, digital advertising revenue was up 17%.
Time to jump?
Despite gaining momentum this year, I still think ITV's share price has room for growth and is a stock investors should consider buying. After it sinks, I would have the opportunity to get more shares today if I had the money.
The stock trades at a price-to-earnings ratio of 15.8, below its peer average. And looking ahead to the next few years, I'm doing well at ITV.
We may experience additional share price volatility. The second half of the year, and 2025, will be affected by what played out in the first half.
But as it is still on track to meet its 2026 targets, which include at least £750m in digital revenue, I think the long-term view is right.
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