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Will Townsquare Media (NYSE:TSQ) debt increase in September

August 10, 2020

By Raphi Shpitalnik

Macroaxis Story

Townsquare Media is scheduled to announce its earnings today. Townsquare Media Cash and Equivalents Turnover is very stable at the moment as compared to the past year. Townsquare Media reported last year Cash and Equivalents Turnover of 5.91. As of 10th of August 2020, Cash Flow Per Share is likely to grow to 2.47, while Earnings Before Interest Taxes and Depreciation Amortization EBITDA are likely to drop (11.5 M). While some of us are becoming more enthusiastic about communication services space, let's recap Townsquare Media in greater detail to make a better estimate of its debt utilization.

Published over a year ago

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Reviewed by Michael Smolkin

The company has 658.96 M in debt with debt to equity (D/E) ratio of 5.43, demonstrating that Townsquare Media may be unable to create cash to meet all of its financial commitments. Townsquare Media has a current ratio of 1.91, which is typical for the industry and considered as normal. The company has Net Profit Margin of (28.5) %, which means that it does not effectively control expenditures or properly executes on its pricing strategies. This is way below average. In the same way, it shows Net Operating Margin of 22.37 %, which entails that for every 100 dollars of revenue, it generated 0.22 of operating income.

Townsquare Media financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Townsquare Media, including all of Townsquare Media's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Townsquare Media assets, the company is considered highly leveraged. Understanding the composition and structure of overall Townsquare Media debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding Townsquare Total Liabilities

Townsquare Media liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Townsquare Media has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Townsquare Media balance sheet include debt obligations and money owed to different Townsquare Media vendors, workers, and loan providers. Below is the chart of Townsquare short long-term liabilities accounts currently reported on its balance sheet.

You can use Townsquare Media financial leverage analysis tool to get a better grip on understanding its financial position

How important is Townsquare Media's Liquidity

Townsquare Media financial leverage refers to using borrowed capital as a funding source to finance Townsquare Media ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Townsquare Media financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Townsquare Media's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Townsquare Media's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between Townsquare Media's total debt and its cash.

Townsquare Media Gross Profit

Townsquare Media Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Townsquare Media previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Townsquare Media Gross Profit growth over the last 10 years. Please check Townsquare Media's gross profit and other fundamental indicators for more details.

Another Deeper Perspective

The entity reported the last year's revenue of 431.16 M. Reported Net Loss for the year was (121.7 M) with profit before taxes, overhead, and interest of 128.39 M.

Liabilities Breakdown

638.5 M

Total Liabilities

Current Liabilities

	Total Liabilities	638.53 Million
	Current Liabilities	62.76 Million
	Long-Term Liabilities	737.16 Million

Can Townsquare Media build up on the recent roll up?

Townsquare Media recent skewness upswings over 0.39. Townsquare Media exhibits above-average semi-deviation for your current time horizon. We encourage investors to investigate Townsquare Media individually to make sure intended market timing strategies and available technical indicagtors are consistent with their estimates about Townsquare Media future systematic risk.

Our Final Takeaway

Although some other firms under the advertising agencies industry are still a bit expensive, Townsquare Media may offer a potential longer-term growth to insiders. The bottom line, as of the 10th of August 2020, we believe Townsquare Media is currently undervalued. It moves indifferently to market moves and projects average probability of distress in the next two years. However, our present 30 days buy-sell recommendation on the firm is Strong Sell.

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Editorial Staff

Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Townsquare Media. Please refer to our Terms of Use for any information regarding our disclosure principles.

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