Boston Omaha experienced a decline today.
Boston Omaha experienced a decline today.
Stock prices for mini-conglomerate Boston Omaha (BOC 0.63%) dropped by 5.4% on Wednesday, as reported at 1:30 p.m. ET.
This small yet diverse entity, operating across various sectors, shared its earnings report late yesterday, falling marginally short of analyst projections. Nevertheless, the lowered share price might make it an attractive buy choice following some challenging years.
Missing the target, and its co-CEO
Boston Omaha is an all-encompassing mini-conglomerate featuring billboard advertising, fiber broadband, insurance, and other financial ventures. Once co-led by Warren Buffett's great-nephew Alex Rozek, who stepped down earlier this year to pursue additional entrepreneurial endeavors, the company is now led by co-founder and co-CEO Adam Peterson.
In Q3, Boston Omaha reported revenue of $27.7 million, representing a 12.8% increase from the previous year, and exceeding the revenue projection of $27.1 million. However, the company's earnings per share missed the forecasted loss by 4 cents, coming in at 5 cents.
Boston Omaha's financial statements may give the impression of net losses, but it's slightly misleading, as both its billboard and broadband ventures carry substantial noncash depreciation charges.
Moreover, Boston Omaha maintains a significant stake in private airline hangar company Sky Harbour. The company's substantial share in Sky Harbour reflects heavily on its income statement due to Sky Harbour's operating losses, amounting to $9.4 million. Conversely, the leap in Sky Harbour's stock price last quarter generated Boston Omaha $7.8 million in unrealized gains. Though net losses on the income statement were at $1.6 million, the savings could have significantly minimized the losses.
Why Boston Omaha could be a solid buy on the decline
Boston Omaha's financial picture is complex due to noncash charges and various investments recorded on its balance sheet. Yet, delving deeper reveals a much more affordable stock. Shares are currently trading approximately 70% below their record high and are under book value.
However, Boston Omaha holds minimal debt and the underlying book value might not be an accurate reflection. BOC's stake in Sky Harbour, currently valued at the initial investment, is much higher in the market, amounting to $64.5 million above the generally accepted accounting principles (GAAP) value. This significant difference would boost Boston Omaha's book value by around 15%.
With a diversified portfolio of steady businesses, Boston Omaha seems like a promising buy on the dip.
Despite missing their earnings per share forecast by 4 cents, Boston Omaha's revenue of $27.7 million in Q3 represented a 12.8% increase from the previous year, attracting interest for potential investing opportunities. The lowered share price due to the earnings report might provide a chance for finance-savvy investors to invest in this company with a strong financial stance and diverse business ventures, such as billboard advertising, fiber broadband, and insurance.