ARB 2012-03-30 Company Report YS MK

ARB 2012-03-30 Company Report YS MK - Arbitron(ARB United...

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Arbitron (ARB) United States Advertising Price (3/29/12): $36.72 Market Value ($mns): $1,002 Arbitron 2011 Price/Earnings: 18.45x S&P500 2011 Market PE (Dec.) 14.51x Company Type: Service Business Valuation: $24.41 (-33.5%) Models: Intrinsic/RV Watch List Recommendation: Add Valuation Recommendation: Hold Investment Thesis: Arbitron (ARB) is a hold. Arbitron is consistently the dominant player in US radio ratings, and its current valuation is reasonable. Revenues have rebounded and should increase over the next five years, albeit at decreasing rates. Margins have expanded and are slated to slowly increase as well. A pricing uplift from PPM commercialization will most likely lessen over the next a few years. Additionally, both a challenging economic environment for advertising and difficulties in obtaining survey/PPM participants could adversely affect the firm’s financial and growth prospects. Background: Arbitron Inc. (NYSE: ARB), headquartered in Columbia, Maryland, is an international media and marketing research firm serving the media—radio, television, cable and out-of-home; the mobile industry as well as advertising agencies and advertisers around the world—mostly in the United States, Europe, Asia and Australia. ARB operates through four business segments: Radio Audience Ratings is the largest segment accounted for 81% of 2011 revenue; both Local
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