Markets

Nielsen (NLSN) Beats Q4 Earnings and Revenue Estimates

Nielsen Holdings plcNLSN reported adjusted fourth-quarter 2015 earnings of 82 cents per share, surpassing the Zacks Consensus Estimate of 76 cents.

Revenues

Nielsen reported revenues of $1.624 billion, down 0.6% year over year due to unfavorable foreign currency impact. However, revenues beat the Zacks Consensus Estimate of $1.600 billion.

On a constant currency basis, revenues increased 5.6%.

Revenues by Segment

Buy business revenues were $879 million (54% of total revenue), down 3.2% year over year but up 5.9% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed and Emerging markets grew 4.8% and 8.4%, respectively.

Watch business revenues were $745 million (46%), up 2.8% year over year or 5.2% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and marketing effectiveness, which improved 4.4% and 29.4%, respectively, on a constant currency basis.

Operating Results

Reported gross margin was 59.7%, down 30 basis points (bps) from the year-ago period.

Nielsen's operating expenses of $660 million were down 1.8% from the year-ago figure of $672 million. However, operating margin expanded 20 bps year over year to 19.1%.

Net Income

On a GAAP basis, Nielsen recorded a net profit of $251 million or 68 cents per share compared with $161 million or 42 cents last year.

On an adjusted basis, net profit per share came in at 82 cents compared with 81 cents a year ago.

Balance Sheet & Cash Flow

Nielsen exited the quarter with cash balance of approximately $357 million as against $358 million in the last quarter. Gross debt was $7.338 billion, down from $7.4 billion at the end of third-quarter 2015.

Net debt (gross debt excluding cash and cash equivalents) was $6.981 billion and net debt leverage ratio was 3.76x at the end of the year.

Cash flow from operations increased to $1.179 billion from the year-ago tally of $1.093 billion. Free cash flow increased to $804 million from $681 million in 2014. The increase in free cash flow and cash flow from operations was driven by stronger operating performance and efficient working capital management.

Dividend and Share Repurchases

Nielsen repurchased $667 million of its stock during the year. The company has a total of $856 million remaining under the existing repurchase program, which it expects to utilize by the end of 2017.

Our Take

Nielsen Holdings is an information and measurement company which offers media and marketing information about what consumers watch and buy on a global and local basis. The company reported better-than-expected results in the fourth quarter of 2015.

The continuous dividend payment and share repurchase reflect Nielsen's financial strength and commitment to return value to shareholders. Also, the company's product launches are progressing well and should drive revenues in the near term.

However, continued investments in technology and infrastructure could weigh on margins and profitability, going ahead.

Currently, Nielsen has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Exar Corp. EXAR , FormFactor Inc. FORM and Rambus Inc. RMBS . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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NIELSEN HOLDNGS (NLSN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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