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ITV (LSE: ITV) has struggled with challenging market conditions in recent years, as evidenced by its downgrade FTSE 100 in 2022. But things are looking up FTSE 250 share, and I think now would be a good time to consider investing.
That's why I think this company is one of the London stock market's best 'rounders'.
Growing up
ITV's earnings record has been less than stellar since the late 2010s. Indeed, the broadcaster's bottom line has declined in four of the last five years. It was hit hard as high interest rates and the recession hit advertising revenue.
But signs of an improving ad market mean City analysts think earnings are poised for strong and sustained change:
| A year | Earnings per share | Income growth |
|---|---|---|
| 2024 | 9.14p | 17% |
| 2025 | 9.72p | 6% |
| 2026 | 10.69p | 10% |
Consumers are also confident in the profit potential of other parts of ITV. Strong momentum in its ITVX broadcast area (where broadcast hours grew by 15% in the first quarter) should give the bottom line a boost.
Continued progress is expected at production company ITV Studios with record profits expected this year. The average organic revenue growth targeted by the broadcaster here is 5% between 2021 and 2026.
Assignments
As a bonus, shares in ITV have been extremely volatile in recent years. They were completely driven out during the pandemic before coming back and climbing. The payments then stopped in 2023.
However, with profits expected to rise again, dividends are forecast to rise from last year's 5p reward:
| A year | Dividends per share | Share growth |
|---|---|---|
| 2024 | 5.03p | 1% |
| 2025 | 5.14p | 2% |
| 2026 | 5.29p | 3% |
Assignments are not guaranteed. But ITV's strong balance sheet means it looks well placed to meet current projections. Its debt-to-EBITDA ratio fell to 0.9 from June.
Anticipated payments are also well covered by expected income. Budget coverage ranges from 1.8 to 2 times between 2024 and 2026.
Price
Current earnings forecasts imply that ITV shares offer excellent value across various metrics. The price to earnings ratio (P/E) is 8.8 2024 times, too 7.8 times and 7.1 periods of 2025 and 2026 respectively. These ratios are well below the FTSE 250 average of 14.5 times.
The current price-to-earnings growth (PEG) ratio is 0.5 this year. Any reading below 1 indicates that the assignment is not significant.
Finally, this year's dividend yield is high 6.6% and he stood up to 6.8% again 7% in 2025 and 2026 respectively. The FTSE 250 average yield is sitting back at 3.2%.
High stock
As with any stock investment, buyers today are taking some risk by acquiring ITV shares. Some declines in the advertising market, for example, may limit revenue and profits. The business also faces intense competition from other broadcasters and broadcasting giants such as Netflix again Amazon.
However, these risks seem to me to outweigh the potential benefits of owning the broadcaster's shares. I think that continued expansion at ITV Studios and investment in broadcasting in particular could deliver long-term returns for investors.
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