) first-quarter fiscal 2014 earnings of 53 cents a share came a
penny ahead of the Zacks Consensus Estimate, owing to strong
performance of the Local media groups, partly offset by lower
political advertising revenues. However, on a year-over-year
basis, earnings fell 3.6%.
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Going forward, management expects second-quarter fiscal 2014
earnings per share to be in the range of 65 cents to 70 cents.
Moreover, for fiscal 2014, earnings are projected between $2.60
and $2.95 per share. The Zacks Consensus Estimate for fiscal 2014
is pegged at $2.78.
Revenues & Margins
Total revenue for the quarter inched up 0.6% year over year to
$356.5 million, reflecting 14.9% increase in other revenues to
$82.2 million and 0.3% rise in circulation revenues to $75.7
million, partly offset by a 4.1% fall in advertising revenues to
$198.5 million. However, total revenue fell short of the Zacks
Consensus Estimate of $361 million.
Total operating expenses for the quarter rose 1.6% to $313.6
million, reflecting an increase of 3.0% in SG&A expenses and
0.1% rise in production, distribution and editorial costs.
Operating profit grew 5.5% to $42.8 million, whereas operating
margin contracted 79 basis points to 12.0%.
National Media Group
revenues marginally fell year over year to $266.9 million,
whereas the segment's operating profit decreased 4.6% year over
year to $28.1 million.
Meredith now projects National Media Group advertising revenues
to remain even or fall marginally in the second quarter of fiscal
Local Media Group
revenues rose 2.7% to $89.6 million, attributable to
non-political advertising revenues and a 94% increase in other
revenues to $24.7 million. The segment's operating income fell
7.1% to $25.6 million.
Non-political advertising revenues increased 3.4% to $64.4
million in the reported quarter.
However, Political advertising revenues fell significantly to
$511,000 from $12.2 million in the year-ago quarter.
Management now expects Local Media Group's non-political
advertising revenues to increase in the mid-to-high single-digit
range during the second quarter of fiscal 2014.
Meredith's Growth Catalysts
Meredith, which competes with
Martha Stewart Living Omnimedia Inc
), boasts a strong portfolio of women's magazines, which helps it
to gain market share. Further, the company remains focused on
bolstering advertising revenues, primarily in the digital space
and is increasingly concentrating on brand licensing, marketing
services and e-Commerce to counter possible economic downturns
In Nov 2013, Meredith will launch Allrecipes magazine, the media
industry's most important print extension of a digital brand.
Advertising interest has been strong, with Procter and Gamble,
Hershey as well as General Motors making commitments.
Meredith is also an ideal pick for investors seeking both growth
and income. The company, through its total shareholder return
(TSR) strategy, intends to boost shareholders' value through
dividends, share repurchases and strategic investments in
business to drive growth. Since its commencement, the company has
hiked its dividend by 60% and repurchased $75 million worth of
The company has a history of regularly paying dividends for 66
consecutive years. Over the last two decades, it has increased
its dividend consistently, which now stands at $1.63 per share.
Moreover, the company constantly seeks to venture into arenas and
add alternative revenue generating channels through strategic
acquisitions and collaborations. Meredith's contract with
Wal-Mart Stores Inc.
) 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.
Alongside, this Zacks Rank #3 (Hold) stock renewed its long-term
affiliation agreements with
) and Fox Broadcasting Co. We expect such measures to help the
company in reducing its dependency on traditional advertising and
provide ample growth opportunities to increase revenues.
Other Financial Details
Meredith ended the quarter with cash and cash equivalents of
$16.4 million, total debt of $370 million and shareholders'
equity of $857.8 million. In first-quarter 2014, the company
repurchased 1.0 million shares. As of Sep 30, 2013, the company
had $26 million worth of shares remaining under share repurchase
authorization. The company's leverage ratio (debt to EBITDA) was
1.4 to 1 for the 12 months period ended Sep 30, 2013.