Meredith Corporation
. (
MDP
) is slated to report its fourth-quarter 2012 financial results on
Thursday, July 26. The current Zacks Consensus Estimate for the
quarter stands at 64 cents a share, reflecting an estimated
year-over-year decrease of about 4.5%. Revenue, as per the Zacks
Consensus Estimate, is $376 million.
Third-Quarter Overview
Meredith's quarterly earnings of 66 cents a share surpassed the
Zacks Consensus Estimate by a penny, but dropped 2.9% from 68 cents
earned in the prior-year quarter. On a reported basis, including
one-time items, earnings dipped 29.9% to 47 cents from 67 cents
delivered in the year-ago quarter.
Total revenue for the quarter inched up 2% year over year to
$345.5 million, reflecting an increase of 3.4% in advertising
revenue to $191.5 million and a jump of 14.9% in circulation
revenue to $76.3 million, partially offset by a decline of 10.9% to
$77.7 million in other revenue. However, total revenue fell short
of the Zacks Consensus Estimate of $350 million.
Guidance
Management now expects earnings in the range of 63 cents to 66
cents for the fourth quarter and between $2.47 and $2.50 per share
for fiscal 2012. The quarterly as well as fiscal projections are
diluted by 10 cents and 12 cents, respectively, due to the impact
of the acquisition of Allrecipes.com.
Agreement of Estimate Revisions
During the last 30 days, 1 out of 4 estimates have been revised
downwards, while none were raised for the upcoming quarter.
Moreover, for fiscal 2012, story remains same with 1 out of 5
estimates being revised downward, while none moving in the opposite
direction.
Magnitude of Estimate Revisions
The Zacks Consensus Estimate for the quarter remained stable
over the last 30 days. The analysts remain constructive on the
stock based on the company's growth potential. However, softness in
print advertising is likely to weigh upon revenues in the near
term.
Positive Surprise History
With respect to earnings surprises, Meredith has topped the
Zacks Consensus Estimate over the last four quarters in the range
of 1.5% to 4.5%. The average remained at 3.4%, indicating that the
company has surpassed the Zacks Consensus Estimate by the same
magnitude in the trailing four quarters.
Our Take
It has been a constant endeavor of Meredith to explore and add
alternative revenue generating channels through acquisitions or by
entering into strategic alliances. Thereby, the company attempts to
reduce its dependence on conventional advertising.
The sluggish economy prompted Meredith to diversify and add
significant revenue streams beyond traditional advertising by
leveraging its brands through strategic alliances. Brand licensing
revenue supplemented the sales of the company, led by a rise in
sales of Better Homes and Gardens-branded products at
Wal-Mart Stores Inc
. (
WMT
).
The company extended its contract with Wal-Mart Stores through
2016, which includes an expansion of the Better Homes and Gardens
branded home decor and garden program at Wal-Mart stores across the
United States and Canada.
Meredith remains committed to make strategic investments to
increase its revenue generating capabilities while enhancing its
profitability. The company is aggressively expanding its brands
through online platforms, televisions, videos, mobile applications,
and is expanding its reach of food and lifestyle content across
tablet products, such as the iPad, NOOK Color, Kindle Fire, and
Samsung Galaxy.
However, in the recent years, Meredith has been facing stiff
competition across its magazine, books, and related publishing
products as well as its television and radio stations with other
mass media, including the Internet and other broadcasting stations,
on the attributes of advertising rates, circulation levels, and
reader demographics. This may weigh upon the company's top- and
bottom-lines results.
Currently, we maintain a long-term Neutral recommendation on the
stock. However, Meredith retains a Zacks #2 Rank that translates
into a short-term Buy rating.
MEREDITH CORP (MDP): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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