Martin Tsvetkov

Is Cumulus Media Inc (NASDAQ:CMLS) Falling From Investors’ Grace?

by Martin Tsvetkov September 28, 2015

As the second largest U.S. radio operator, Cumulus Media Inc (NASDAQ:CMLS, CMLS message board) covers quite a lot of ground among the 150 million listeners reached through radio, digital media and other marketing solutions. Yet, there’s one thing that has remained beyond its control – the stock charts. For CMLS is sinking like a stone, hitting one 52-week low after another. Does this mean that the Cumulus’ stockholders are facing the prospect of losing all their money, though?

It is hard to tell. On the one hand, Wall Street analysts seem to remain bullish on CMLS, recommending the stock as a ‘strong buy’, which means they see some upward potential lying ahead. This outlook is shared by CEO Lewis W Dickey, Jr. who acquired 30 thousand shares of Class A common stock at the price of $1.60 per share on Aug. 5, 2015. Not all insiders seem to be on the same page, though, as officer John Dickey recently got rid of more than 70 thousand shares by selling them at prices ranging from $1.35 to $1.44 per share. Just four weeks later, CMLS has already lost almost half of this value, only to hit a new 52-week low of $0.74 today. CMLS closed trade just a tad higher at $0.75.

While insider selling in the event of dismal chart performance might serve as a warning to aspiring stockholders, this is not really the case here as Dickey still beneficially owns more than two million shares of the company. What is more, the net insider activity is even a fairly positive number as seen from a 12-month rather than a 3-month perspective. So the black clouds gathering over CMLS’s charts might have a silver lining after all. Yet, this may not be what the majority of investors holding a stake in CMLS think. Indeed, the short interest in CMLS is gargantuan as compared to the stock’s daily average volume, leading us to suggest that bearish sentiments on CMLS are more or less prevalent among investors.

The reason why bearish moods have recently become the norm for CMLS might be found in the company’s dwindling revenue on a year-over-year basis, which also applies to its net results both as a whole and on a per-share level. And while Cumulus did record slightly smaller revenue streams than those generated in Q2 of 2014, it did fare better than the first quarter of 2015 and analysts expect growing earnings over the next couple of years. Once the Q3 results have come out, probably in November, we will know if they are on the right track.

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