I'd buy while the S4 Capital share price suffers

As a shareholder in digital media agency group S4 Capital (LSE: SFOR), I read yesterday’s results with interest. They were a mixed bag. The S4 Capital share price has fallen 44% in a year and I expect it may continue to struggle in the immediate aftermath of the results.

I plan to keep my shares and even took advantage of a recent share price drop to add to my holding. It’s now large enough that I do not plan to buy any more, to make sure my portfolio remains diversified. But if I had fewer shares and spare cash to invest, I would scoop up more S4 Capital shares today.

Growth and losses

The highlight of the results was strong evidence that the company remains firmly in growth mode – and impressively so.

Last year saw revenues pass the GBP1bn mark for the first time, after surging 56%. The adjusted operating profit rose 20% to GBP114m. The firm secured a further 10 clients with annual revenue above £20m each.

It also said that “over the longer term we expect our growth to outperform our market and competition“. However, revenue growth has come at a cost. The firm made a loss of GBP160m, almost triple last year’s figure.

Net debt increased from GBP18m to GBP110m. There is a risk that continued growth will come at the cost of profitability.

Long-term outlook

Some of the numbers definitely look bad. The S4 share price has come a long way from its previous highs, and I think its large loss last year could further hurt investor enthusiasm for the shares.

That could push them down even more. As a long-term investor however, my focus is on how the company will do not only in coming months, but years and decades from now. Here I feel optimistic.

I think that positivity is supported by the latest results. S4 operates in an area I expect to see ongoing growth in coming decades, although digital ad spending may drop when the economy is weak, like it is now. The agency has a large global footprint and over 8,000 staff with a variety of skills.

By focussing heavily on large tech clients like Alphabet, S4 may suffer when tech firms do but, conversely, it ought to benefit from their long-term growth.

Share price recovery

Despite my own confidence, I am a bit concerned that no directors have bought shares so far in 2023. If the current S4 Capital share price is the bargain I think it is and the board is confident in the company’s prospects, I am surprised there has been no director buying. The coming year will be crucial for S4.

It needs to prove it can grow revenues without losses worsening. Indeed, in the long term, it must demonstrate its business model can be profitable. Until losses narrow I think the share price may stay in the doldrums.

I am holding (and buying) in the hope of better days ahead, even if they are still some distance away.

Tags:

burger-king-1 listed on couponmatrix.ukindustville listed on couponmatrix.uklush listed on couponmatrix.ukspotify listed on couponmatrix.uktiffany-rose listed on couponmatrix.ukzest-beauty listed on couponmatrix.uk
burger-king-1 listed on couponmatrix.ukCurb those hunger pangs with Burger King. As the creators of the legendary Whopper, Burger King are no strangers to top quality fast food - using the finest fresh ingredients, preparing every sandwich to order and flame-grilling burgers are just some of the ways Burger King sets itself apart. Make the most of a Burger King voucher from us to save on your next order - whether you’re craving a cheeseburger or want to indulge with a tasty sundae, you can treat yourself for less with Burger King!
industville listed on couponmatrix.ukBrighten your humble abode with the rustic, industrial lighting available at Industville. Bringing its own vintage charm to home lighting, with every design handcrafted here in the UK, you know you’re getting quality lighting for less with the latest Industville discount code. Whether it’s a grand chandelier for your dining room or a quaint set of fixtures for your garden path, trust Industville lighting to deliver the ideal illumination for your home.
lush listed on couponmatrix.ukLush has revolutionised the cosmetics world with their famously effective cruelty-free products. From fizzing bath bombs to hard-working hair treatments, Lush products are 100% handmade, 100% vegetarian and 100% free from animal testing. Treat yourself with a Lush discount code and discover the sweet-smelling world of natural cosmetics. Fresh and environmentally friendly, with a touch of indulgence - what’s not to love?
spotify listed on couponmatrix.ukThe days of carting around stacks of CDs or downloading song-by-song are long gone. Spotify is a music lover’s dream, granting access to millions of albums and podcasts directly from the Spotify app. Whether you prefer your guilty pleasures, learning something new or creating public playlists, there’s so much to enjoy about this music subscription service. Unlock Spotify Premium for less with student or family accounts, and by making the most of Spotify discount codes from Groupon.
tiffany-rose listed on couponmatrix.ukTiffany Rose helps bring out the beautiful in every curved belly through an array of elegant maternity dresses for both everyday wear and special occasions. Whether you want something comfy and convenient for nursing or are seeking a jaw-dropping maternity wedding gown to wear down the aisle, a Tiffany Rose discount code can ensure you compliment your curve at a fraction of the cost. You’ve got plenty on your plate growing another human being, so let Tiffany Rose look after your looks in the meantime. Should you have friends or family going through their own pregnancy journey, you can help them look as good as they deserve by buying them a Tiffany Rose gift voucher. Delivered instantly via email and capable of being topped up with any custom value you can afford, a gift voucher is an ideal way to help widen a pregnant woman’s wardrobe on a budget. What’s more, you don’t need to use up the full balance when redeeming the voucher, meaning it can be applied to consecutive shops. There’s little more important than feeling beautiful on your own wedding day, especially when there’s a third family member heading down the aisle with you. Accentuating your baby bump in the best way possible, you can use Tiffany Rose vouchers to bag a wonderful Tiffany Rose wedding dress of your own at a bargain price. With both full and knee-length designs to pick between, you’re free to opt for whichever wedding dress styles vibes best with you and your plus one.
zest-beauty listed on couponmatrix.ukFor beautiful hair and flawless skin, look no further than Zest Beauty - bringing you the best in skincare, nails, makeup, tanning and much more. Not to leave anyone behind, Zest Beauty also offers a men's section, where you can find everything you need to look on point. With your Zest Beauty discount codes, no matter your gender, you can enjoy looking and feeling great for some awesome prices. Treat yourself to a deep hair treatment, facial exfoliator or an intensely moisturising mask. Or, with the savings you've made, pick up all three and enjoy a spa day at home!