Undervaluved HMV Group's share price.....

Fuzzythinking

I could not understand why HMV Group's share is undervalved now while they are generateing consistent profit for many years and yet they pay a good rate of dividend. Will the share price will go down further when George Osbourne annouce a heavey public spending and increase 20% VAT which will force people to lose the job? Maybe we are entering into another recession?

Is it a good choice to buy HMV Group share now?

FT

Reaper

You can find quite a lot of discussion on them in the risky share thread.

Perhaps the biggest risk is the internet. Internet retailers have taken much of the market for CDs, DVDs, Games and Books (HMV own Waterstones). All their major high street competitors have gone bust (Zavvi, Woolworths, Borders etc) and the market obviously thinks they are next. Also supermarkets are starting to crowd in on their market.

The share price stays particularly low because it is heavily shorted.

So it is far from a risk free investment. Having said that I have bought in. I don't expect their share price to rise but I am hoping the very attractive dividend income will continue.

m0n3y_3

I have been thinking the same about HMV (including Waterstone's) whose price has been falling since 2005 high of £2.70 to Fridays 56p as I would like to invest in "Retail" sector, however, everyone I know buys their DVDs, CDs and Books online with the likes of Amazon, cdwow, play etc, so I suppose the question is are the numbers of people buying from a hmv high street store going to continue to reduce year on year and can hmv.com get a larger slice of the internet sales? In their favour I suppose a lot of the high street competition have gone, except WH Smiths (whose share price varies up and down by about £1.50 over a year).

david39

I think it might have something to do with them owning Waterstones - the book retailer. There is a big question mark over the future of book retailing, with the advent of electronic reading tablets, and nobody seems sure of what is going to happen to hard-copy books in the future.

A similar problem exists with music and dvd/bluray - the download market being a growing threat to the overall business.

I think at the recent year-end report, Waterstones had improved their performance and the HMV main-line brand (music, games videos) had underperformed, which surprised many as the reverse had been the expected outcome.

I think HMV may well be a speculative buy at the moment - but one thing in their favour - over the past 10 years (other than the Waterstones purchase) they have successfully changed their business model in line with popular demand whereas their main competitors (Zavvi and Woolworths) have gone to the wall. They may well adapt again as and when the market requires them to.

I believe they have an offer from Tim Waterstone to buy back the book business, but at about a third of the price they paid for it - that's also a minus point in the equation.

LongTermLurker

The move in popularity from physical media to data files must have been a big hit on traditional retailers including music, video and books. The vast majority of current and future consumers will continue to listen to and read data files in one format or another. If they buy a CD, they will undoubtedly rip it to MP3 or some other format so they can listen to it on their favourite media player. People are also becoming more used to buying things online and unless the likes of HMV dramatically embrace the Internet, selling both physical and downloadable media online, IMO they will continue to see reduced market share.

I used to love going into record shops and browsing through the albums, but it's a long time since I could be bothered reading album sleeves and a long time since I bought physical media - itunes for me

Can you even still go into a shop and say "can you put me this on please?... Play the next track"? Even download sites allow you to preview tracks.

cashbackproblems

Never mind shopping online how many of us even actually pay for our songs, dvds, shows??? This is why HMV doesnt appeal as a business, it has nothing of great value to suggest any huge increases in sp.

ses6jwg

Do they not also have a lot of debt ?

Rob_192

cashbackproblems wrote: »

Never mind shopping online how many of us even actually pay for our songs, dvds, shows??? This is why HMV doesnt appeal as a business, it has nothing of great value to suggest any huge increases in sp.

I do! I'm passionate about my music and have paid for almost (;)!) everything I own. Not much of it bought in HMV thought:D

pmorrison_2

It will also be affected by GameStop, a huge games retailer in the US, announcing that they will be opening stores in the UK. Its definetly a sell!

dealer_wins

I wouldnt say its undervalued. Anything is only worth what someone else will pay for it.

YumYum

My other half works in a HMV store in England. I used to work there too and from what he's told me, the store is not doing half as well as it was a couple of years ago. They've pretty much been told that if they don't improve then the store will close. This particular store despite being one of the smallest has won many an award so it's pretty upsetting to see it all go downhill. HMV as a company is trying to improve by moving into technology a lot more, the pre-owned games market and selling higher end clothing but I guess only time will tell.