Liberty Interactive Corporation’s (Nasdaq:LINTA)primary assets consist of fully consolidated subsidiaries, including QVC, as well as sizable stakes in other listed media companies. This includes home shopping network HSN Inc. (Nasdaq:HSNI), Tree.com (Nasdaq:TREE), Interval (Nasdaq:IILG) and Expedia (Nasdaq:EXPE). The web of operations makes it challenging to grasp the underlying economics of each business, but most are growing robustly and solidly profitable.
First Quarter Recap
Net retail sales advanced 7.2% to $2.3 billion. This consisted of $1.9 billion in QVC revenue, which grew 5.3%. $382 million was generated in E-commerce revenue (growth of 18%) and includes sites such as Provide, Backcountry, and Celebrate. $816 million came in Expedia revenue (12% growth). Backing out the equity not owned results in the total sales line of $2.3 billion. The publicly traded businesses are actually tracking stocks, meant to reflect the individual economics of the operations that Liberty owns.
Reported pre-tax income jumped 89% to $148 million and included a big decline in losses on financial instruments. However, a big gain in last year’s quarter meant reported net income fell 77% to $91 million. This worked out to 16 cents per diluted share.
Outlook and Valuation
For the year, analysts project full-year sales growth of nearly 5% and total sales just north of $10 billion. The consensus earnings projection is $1 for all of 2012 and $1.22 for 2013. This puts the forward P/E multiples at 17.4 and 14.3, respectively.
The Bottom Line
Liberty’s stock is part of the empire of media magnate John Malone. It’s somewhat challenging to keep up with all the operational trends of Liberty and the multitude of other public and private firms in Malone’s web. Overall though, the mix of businesses has grown solidly in recent years, and this has shown through in the steady shareholder stock gains.
An investment in Liberty or any of the related companies requires continued confidence in Malone and his colleagues’ ability to grow their businesses profitably. At this point, there is little reason to doubt their abilities. Many of the businesses lead their industries, are appealingly exposed to strong e-commerce trends across the world, and have leadership positions in their respective niches of the market.
At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.