iHeartMedia (IHRT)
iHeartMedia faces an uphill battle. Not only did its demand evaporate but also its negative returns on capital show it destroyed shareholder value.― StockStory Analyst Team
1. News
2. Summary
Why We Think iHeartMedia Will Underperform
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ:IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
- Sales stagnated over the last two years and signal the need for new growth strategies
- Performance over the past five years shows each sale was less profitable, as its earnings per share fell by 15.9% annually
- Unfavorable liquidity position could lead to additional equity financing that dilutes shareholders
iHeartMedia’s quality is insufficient. More profitable opportunities exist elsewhere.
Why There Are Better Opportunities Than iHeartMedia
High Quality
Investable
Underperform
Why There Are Better Opportunities Than iHeartMedia
iHeartMedia is trading at $1.03 per share, or 0.2x forward EV-to-EBITDA. We acknowledge that the current valuation is justified, but we’re passing on this stock for the time being.
It’s better to pay up for high-quality businesses with strong long-term earnings potential rather than buy lower-quality stocks because they appear cheap. These challenged businesses often don’t re-rate, a phenomenon known as a “value trap”.
3. iHeartMedia (IHRT) Research Report: Q4 CY2024 Update
Global media and entertainment company iHeartMedia (NASDAQ:IHRT) fell short of the market’s revenue expectations in Q4 CY2024 as sales rose 4.8% year on year to $1.12 billion. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $1.10 billion at the midpoint, or 33.7% above analysts’ estimates.
iHeartMedia (IHRT) Q4 CY2024 Highlights:
- Revenue: $1.12 billion vs analyst estimates of $1.17 billion (4.8% year-on-year growth, 4.1% miss)
- Adjusted EBITDA: $246.2 million vs analyst estimates of $291.3 million (22% margin, 15.5% miss)
- Management’s revenue guidance for the upcoming financial year 2025 is $3.86 billion at the midpoint, missing analyst estimates by 0.5% and implying 0% growth (vs 2.5% in FY2024)
- EBITDA guidance for the upcoming financial year 2025 is $770 million at the midpoint, above analyst estimates of $761.6 million
- Operating Margin: 9.3%, up from 7.5% in the same quarter last year
- Free Cash Flow Margin: 9.9%, down from 13.3% in the same quarter last year
- Market Capitalization: $329.1 million
Company Overview
Occasionally featuring celebrity hosts like Ryan Seacrest on its shows, iHeartMedia (NASDAQ:IHRT) is a leading multimedia company renowned for its extensive network of radio stations, digital platforms, and live events across the globe.
iHeartMedia got its start as a single radio station and has since evolved into one of the largest radio and media companies. This growth stemmed from recognizing radio's potential as a personal, engaging medium to deliver varied audio content, from music and news to talk shows.
iHeartMedia offers a diverse range of content, including broadcast and online radio, podcasts, live music events, and syndicated programming. By providing on-demand, versatile audio content, the company caters to a broad spectrum of listener interests and offers advertisers targeted marketing opportunities.
The company generates revenue through advertising, live events, and digital subscriptions. Its extensive network ensures constant content flow, appealing to various tastes.
4. Broadcasting
Broadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.
Competitors in the audio and radio broadcasting industry include Sirius XM (NASDAQ:SIRI), Cumulus Media (NASDAQ:CMLS), and Townsquare Media (NYSE:TSQ).
5. Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, iHeartMedia struggled to consistently increase demand as its $3.85 billion of sales for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a sign of poor business quality.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Just like its five-year trend, iHeartMedia’s revenue over the last two years was flat, suggesting it is in a slump.
We can better understand the company’s revenue dynamics by analyzing its three most important segments: Multiplatform, Digital Audio, and Services, which are 61.2%, 30.3%, and 8.7% of revenue. Over the last two years, iHeartMedia’s Multiplatform revenue (broadcasting, networks, events) averaged 4.5% year-on-year declines, but its Digital Audio (podcasting) and Services (media representation) revenues averaged 6.8% and 6.7% growth.
This quarter, iHeartMedia’s revenue grew by 4.8% year on year to $1.12 billion, falling short of Wall Street’s estimates. Company management is currently guiding for a 37% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 1% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below the sector average.
6. Operating Margin
iHeartMedia’s operating margin has risen over the last 12 months, but it still averaged negative 20.5% over the last two years. This is due to its large expense base and inefficient cost structure.

In Q4, iHeartMedia generated an operating profit margin of 9.3%, up 1.9 percentage points year on year. This increase was a welcome development and shows it was recently more efficient because its expenses grew slower than its revenue.
7. Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Sadly for iHeartMedia, its EPS declined by 15.9% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

In Q4, iHeartMedia reported EPS at $0.21, up from $0.09 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast iHeartMedia’s full-year EPS of negative $6.69 will reach break even.
8. Cash Is King
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
iHeartMedia has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 2.9%, lousy for a consumer discretionary business.

iHeartMedia’s free cash flow clocked in at $111.1 million in Q4, equivalent to a 9.9% margin. The company’s cash profitability regressed as it was 3.4 percentage points lower than in the same quarter last year, but it’s still above its two-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends carry greater meaning.
9. Return on Invested Capital (ROIC)
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).
iHeartMedia’s five-year average ROIC was negative 7%, meaning management lost money while trying to expand the business. Its returns were among the worst in the consumer discretionary sector.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, iHeartMedia’s ROIC averaged 3.7 percentage point increases each year. This is a good sign, and we hope the company can continue improving.
10. Balance Sheet Risk
Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.
iHeartMedia’s $5.07 trillion of debt exceeds the $259.6 billion of cash on its balance sheet. Furthermore, its 6819× net-debt-to-EBITDA ratio (based on its EBITDA of $705.6 million over the last 12 months) shows the company is overleveraged.
At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. iHeartMedia could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.
We hope iHeartMedia can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.
11. Key Takeaways from iHeartMedia’s Q4 Results
We were impressed by iHeartMedia’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EBITDA guidance slightly exceeded Wall Street’s estimates. On the other hand, its Digital Audio revenue missed and its revenue fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 7.2% to $2 immediately following the results.
12. Is Now The Time To Buy iHeartMedia?
Updated: May 4, 2025 at 10:48 PM EDT
The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in iHeartMedia.
iHeartMedia doesn’t pass our quality test. To kick things off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.
iHeartMedia’s EV-to-EBITDA ratio based on the next 12 months is 0.2x. This valuation multiple is fair, but we don’t have much confidence in the company. There are more exciting stocks to buy at the moment.
Wall Street analysts have a consensus one-year price target of $2.83 on the company (compared to the current share price of $1.03).
Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.
Want to invest in a High Quality big tech company? We’d point you in the direction of Microsoft and Google, which have durable competitive moats and strong fundamentals, factors that are large determinants of long-term market outperformance.
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