Chryon: The whole world is watching
Chyron’s (NYSE:CGS) slogan is “The company the whole world watches” and it couldn’t be more fitting; whether you’re watching ABC, FOX, CBS or ESPN, it is inevitable that you will be watching Chyron’s work as well.
The New York-based company provides broadcast graphics hardware, software and related services to the television industry. In 1970, it introduced its first character generator; today its work is the industry standard.
Its products are used to create 2-D and 3-D titles and moving graphic images for live sports, news and entertainment shows. This includes news titles, sports scores, weather information and finance tickers. The company’s ChyTV business has a full line of products aimed at cashing in on the growing video and digital signage markets. ChyTV video signage products are used at hospitals, universities, and sport and entertainment venues.
The growth that Chyron has experienced over the past few years alone has not gone unnoticed. It was recently included in Fortune Small Business’ list of the 100 fastest-growing companies in the United States, and just last month, Chyron was added to the Russell Microcap Index. The company’s hope is that the move will give its stock more exposure to institutional investors.
Whether or not this expectation materializes, Chyron’s common stock has been doing just fine on its own. It’s up 60% over the past 52 weeks and was trading at $6 per share at Thursday’s close.
Chyron’s first-quarter results reported on May 13, 2008 provided validation for this steep appreciation in stock price. Company management reported a 478% year-over-year increase in net income to $255,000 from $44,000. Revenue for the quarter was up 27.7% from the first quarter in 2007.
The improvement was the result of the continued global movement from analog to digital television as well as the increasing popularity of HDTV. “We are very excited about our future prospects,” said Chyron President and CEO Michael Wellesley-Wesley. “Our momentum and recent market share gains in the broadcast business, which are exemplified by our winning the NBC Universal and NBC Olympics business, couple with our successful integration and integration of AXIS, put us in a strong position for future growth.”
During the first quarter, the company acquired AXIS Graphics for $3.1 million; the purchase was to be financed by a combination of both cash and stock. AXIS has a proprietary Web-based graphics system that Chyron is looking to leverage off of in launching a new online division called Chyron Online, which will provide services that include high resolution maps, real-time weather displays and news graphics.
Other positive developments in the quarter included an improvement in gross profit margin as well as impressive growth in the company’s international business. Lower material costs and overhead rates helped bump up Chyron’s gross profit margin to 71% versus 68% in its year-ago quarter. The company’s international revenues rose by 39% over the prior-year quarter. And in April, Chyron announced its largest Asia Pacific order from an Australian network that is looking to upgrade its graphics workflow in seven cities across the country.
Analysts are looking for Chyron to close out the year with EPS of $0.30 on total revenue of $40.9 million. These figures would represent 25% and 26.6% improvements over their respective 2007 metrics. In 2009, analysts are expecting the company to grow EPS by 66.7% over expected 2008 EPS. Revenue is expected to rise by another 23.2%. The one-year target price estimate for Chyron is $8 per share.
One aspect of the company that should be considered by potential investors is Chyron’s vested interest in itself. Thirty-eight percent of all outstanding shares are owned either by insiders or by 5% owners in the company. It is decidedly more difficult to come across such a trend in many large-cap companies.
As is the case with many small-cap and micro-cap stocks, a risk to keep in mind with Chyron is that it is thinly traded. The fact that Chyron’s average daily volume is a little more than 13,000 shares is apt to make its stock price a bit volatile.
Despite daily fluctuations in its price, though, this stock has clearly been trending higher over the course of the past year. The strategic acquisition of AXIS and corresponding shift into online graphics should prove to be an added area of growth that Chyron will be able to capitalize upon in the quarters ahead.
Stay tuned.
The New York-based company provides broadcast graphics hardware, software and related services to the television industry. In 1970, it introduced its first character generator; today its work is the industry standard.
Its products are used to create 2-D and 3-D titles and moving graphic images for live sports, news and entertainment shows. This includes news titles, sports scores, weather information and finance tickers. The company’s ChyTV business has a full line of products aimed at cashing in on the growing video and digital signage markets. ChyTV video signage products are used at hospitals, universities, and sport and entertainment venues.
The growth that Chyron has experienced over the past few years alone has not gone unnoticed. It was recently included in Fortune Small Business’ list of the 100 fastest-growing companies in the United States, and just last month, Chyron was added to the Russell Microcap Index. The company’s hope is that the move will give its stock more exposure to institutional investors.
Whether or not this expectation materializes, Chyron’s common stock has been doing just fine on its own. It’s up 60% over the past 52 weeks and was trading at $6 per share at Thursday’s close.
Chyron’s first-quarter results reported on May 13, 2008 provided validation for this steep appreciation in stock price. Company management reported a 478% year-over-year increase in net income to $255,000 from $44,000. Revenue for the quarter was up 27.7% from the first quarter in 2007.
The improvement was the result of the continued global movement from analog to digital television as well as the increasing popularity of HDTV. “We are very excited about our future prospects,” said Chyron President and CEO Michael Wellesley-Wesley. “Our momentum and recent market share gains in the broadcast business, which are exemplified by our winning the NBC Universal and NBC Olympics business, couple with our successful integration and integration of AXIS, put us in a strong position for future growth.”
During the first quarter, the company acquired AXIS Graphics for $3.1 million; the purchase was to be financed by a combination of both cash and stock. AXIS has a proprietary Web-based graphics system that Chyron is looking to leverage off of in launching a new online division called Chyron Online, which will provide services that include high resolution maps, real-time weather displays and news graphics.
Other positive developments in the quarter included an improvement in gross profit margin as well as impressive growth in the company’s international business. Lower material costs and overhead rates helped bump up Chyron’s gross profit margin to 71% versus 68% in its year-ago quarter. The company’s international revenues rose by 39% over the prior-year quarter. And in April, Chyron announced its largest Asia Pacific order from an Australian network that is looking to upgrade its graphics workflow in seven cities across the country.
Analysts are looking for Chyron to close out the year with EPS of $0.30 on total revenue of $40.9 million. These figures would represent 25% and 26.6% improvements over their respective 2007 metrics. In 2009, analysts are expecting the company to grow EPS by 66.7% over expected 2008 EPS. Revenue is expected to rise by another 23.2%. The one-year target price estimate for Chyron is $8 per share.
One aspect of the company that should be considered by potential investors is Chyron’s vested interest in itself. Thirty-eight percent of all outstanding shares are owned either by insiders or by 5% owners in the company. It is decidedly more difficult to come across such a trend in many large-cap companies.
As is the case with many small-cap and micro-cap stocks, a risk to keep in mind with Chyron is that it is thinly traded. The fact that Chyron’s average daily volume is a little more than 13,000 shares is apt to make its stock price a bit volatile.
Despite daily fluctuations in its price, though, this stock has clearly been trending higher over the course of the past year. The strategic acquisition of AXIS and corresponding shift into online graphics should prove to be an added area of growth that Chyron will be able to capitalize upon in the quarters ahead.
Stay tuned.
About the Author
Billy Fisher is a certified public accountant and and freelance investment writer whose work has appeared in Investor's Business Daily and The Motley Fool.
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