On Jun 24, 2014, we initiated a research report on
John Wiley & Sons Inc.
). The company covers a broad spectrum of services including
education, professional development and research. The company
publishes around 1,600 journals, publishes various books (both
digital and print) and has several online services/products making
it one of the biggest names in the publishing arena. However, with
advancing technology, print media is on a decline.
John Wiley & Sons is transforming itself into a digital
services oriented company to combat decline in the print media.
Further, the company has resorted to aggressive restructuring to
boost margins and is also emphasizing on the development its IT
infrastructure. The company aims to achieve $80 million in annual
savings, commencing from 2015. As per management's commentary
during fourth-quarter fiscal 2014 earnings call, the company is on
track to achieve its targeted savings and is likely to reinvest
half of these savings in the business.
In the recent concluded quarter, the company posted adjusted
earnings per share of 77 cents, much ahead of the Zacks Consensus
Estimate of 69 cents per share, and up 8% (or up 4% on constant
currency basis) year over year. Revenues grew 3% (or 1% on
constant currency basis) year over year to $457 million and
surpassed the Zacks Consensus Estimate of $445 million. Growth at
Education and Research segments was partly run down by declining
revenues at the Professional Development segment.
To acquire a greater market share, John Wiley & Sons has
resorted to intense inorganic expansion. Over the years, the
company has acquired several publishing and distribution companies
along with several online service providers. We believe, as the
company is undergoing transformation to digital from print media,
these acquisitions will go a long way to help it achieve its goal.
John Wiley & Sons, which competes with
Reed Elsevier NV
), is an attractive pick for growth and yield seeking investors.
The company has continuously increased dividends and announced
share buyback programs to maximize shareholder value.
Going ahead, John Wiley & Sons is expecting mid-single-digit
revenue growth for fiscal 2015 and anticipates earnings in the
range of $3.25-$3.35 per share. However, the company's earnings
projection was below the expectations of analysts, who in turn
trimmed their estimates to better align with the company's
guidance. As a result, the Zacks Consensus Estimate for fiscal 2015
and 2016 fell 4.6% and 4.0% to $3.33 and $3.64, respectively.
Further, due to its widespread global operations, the company's
revenue remains vulnerable to currency fluctuations. Moreover,
volatility in primary raw material prices poses a serious threat to
the company's bottom line.
Currently, John Wiley & Sons carries a Zacks Rank # 4 (Sell).
Key Picks from the Sector
A better ranked publishing stock worth considering includes
The E. W. Scripps Company
), which sports a Zacks Rank #1 (Strong Buy).
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