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Meredith (MDP) Beats on Q4 Earnings, Initiates 2016 Outlook - Analyst Blog

Zacks Equity Research
Updated

Meredith Corporation MDP reported adjusted earnings of 94 cents per share for the fourth quarter of fiscal 2015 that beat the Zacks Consensus Estimate by a couple of cents and jumped 6.8% on a year-over-year basis.
 

 

 

For the fiscal, adjusted earnings per share came in at $3.30, a penny ahead of the Zacks Consensus Estimate. The bottom line also rose 18% year over year.

The company continues to gain from improvement in advertising as well as the digital section. Also, favorable outcome from the recently acquired assets that include rights to the Martha Stewart Living and Martha Stewart Weddings magazines and the www.marthastewart.com and www.marthastewartweddings.com websites from Martha Stewart Living Omnimedia Inc. MSO have been adding to growth. Digital advertising revenues grew over 45% in the fiscal year with National media reporting a 50% increase and Local media reporting a 40% rise.

Management initiated its earnings per share guidance for fiscal 2016. The company now expects earnings to be around $2.90¬–$3.25.

Further, first-quarter fiscal 2016 earnings per share are expected to be in the range of 47-52 cents per share compared with earnings of 65 cents reported in the prior-year quarter. The prior year quarter benefited from political advertising revenue of $13 million (or 18 cents per share).  The Zacks Consensus Estimate for the first quarter and fiscal 2016 are pegged at 51 cents and $3.17, respectively.

Revenues & Margins

Total revenue for the quarter grew 9% to $425.9 million, almost in line with the Zacks Consensus Estimate. Top-line growth was driven by a 13.2% increase in advertising revenues to $231.1 million, 5.3% growth in circulation revenues to $92.3 million and 3.6% growth in Other revenues to $102.5 million.

For the fiscal, revenues grew 8.5% year over year to $1,594.2 million, slightly lower than the Zacks Consensus Estimate of $1,595 million. The growth was driven by 15.2% increase in advertising revenues to $896.5 million and 5.7% in Other revenues to $383.9 million, thereby offsetting the 4.1% decline in Circulation revenues of $313.7 million.

For the first quarter of fiscal 2016, total revenue is anticipated to increase in the low-single digits range.

Operating profit rose 9.9% year over year to $73.3 million in the quarter, while margin was up 10 basis points to 17.2% from adjusted figure of 17.1%.

Segment Details

Meredith’s National Media Group revenues were up 5.8% year over year to $295.8 million due to an 11% increase in advertising revenues to $136.2 million and 5.3% jump in circulation revenues of $92.3 million that offset a 2.7% fall in other revenues of $67.3 million. The segment’s operating profit rose 2% to $44.2 million.

Meredith now projects National Media Group revenues to increase in low to mid-single digits in the first quarter of fiscal 2016.

Meredith’s Local Media Group revenues rose nearly 17% to $130 million driven by 19.6% rise in non-political advertising revenues to $93.6 million while Other revenues grew 18.2% to $35.2 million. However, political advertising revenues were down 60.5% to $1.2 million. The segment’s operating income came in at $40 million.

Management now expects Local Media Group’s revenues to remain even or increase  marginally in the first quarter of fiscal 2016.

Other Financial Details

Meredith ended the year with cash and cash equivalents of $22.8 million, total debt of $795 million and shareholders’ equity of $951.9 million. During the fiscal year, the company bought back 925,000 shares. Moreover, the company raised its dividend by 6% to $1.83 per share in the fiscal year.

As of Jun 30, 2015, Meredith had $97 million remaining under its existing share repurchase authorization. The company’s leverage ratio (debt-to-EBITDA) was 2.5 to 1 for the 12 month-period ended Jun 30, 2015.

Currently, Meredith carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the media/publishing sector are AMC Networks Inc. AMCX and Gray Television, Inc. GTN. Both stocks sport a Zacks Rank #1 (Strong Buy).

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MEREDITH CORP (MDP): Free Stock Analysis Report
 
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