Future (LSE:FUTR) shares ended 2021 with a gain of 120%, significantly beating the FTSE 250 average return of 15%. It was the third-best-performing stock in the FTSE 250 index.
So what caused this phenomenal triple-digit surge? Well, 2021 was filled with a string of encouraging trading updates and business announcements. Many of these helped to propel this stock to new highs.
Materially ahead
One month into 2021, Future reported high levels of online engagement during the Black Friday period. It expected full-year profits to be “materially ahead of current market expectations”.
Online engagement is a key metric for this digital media platform, particularly as advertising forms a large part of its revenues. It owns over 200 magazine brands including TechRadar, Marie Claire and Tom’s Guide. Content is at the centre of its business model. It aims to monetise this content via diversified revenue streams that include magazine subscriptions, and licensing deals in addition to advertising.
During the year, Future added several new brands. It bought Dennis Publishing for £300m in a deal that it expected to be materially earnings enhancing. This added magazine brands including Moneyweek and Computer Active. In addition to purchasing several other brands it also announced a joint venture to produce Marie Claire US.
A shining FTSE 250 stock
The stock was propelled higher after reporting record half-year results in May that were materially ahead of market expectations. Future achieved strong organic growth and an improvement in profit margin. It was an “exceptionally strong first half” with sales up 89% to £273m. It attributed this success to the diversity of its revenue streams and a scalable operating model.
Another encouraging trading update followed in July, giving the share price another push up. Here, CEO Zillah Byng-Thorne reflected on strong cash generation and pointed to robust digital advertising revenue.
The share price then drifted for a few months, until November when it reported its full-year results. It was a positive report that gained a favourable market reaction with the share price achieving its strongest one-day move since September 2020. Strong trading momentum continued into the second half of the year with revenue up 79% to £607m from £340m in 2020. It also achieved 23% organic growth. In addition, Future reported improved quality of earnings, driving its profit margin higher versus the prior year. It highlighted its cash-generating abilities and raised its dividend payments for the year.
Targeting America
Part of Future’s strategy is to focus on the United States – a large market with great potential. In relation to this strategy, Byng-Thorne commented: “Growth was accelerated in the US and we are confident about our ability to capitalise on the opportunity in North America.”
Future ended 2021 with another positive update, when it reported a strong Black Friday performance. It drove over 1.6m of sales transactions and achieved $137m in US e-commerce sales in the period covering Black Friday and Cyber Monday. It all meant that by the end of the year, Future’s share price closed up by that impressive 120%, near its all-time-high level.
Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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