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Analyst Blog

On Jul 10, 2014 we issued an updated research report on Meredith Corporation (MDP - Analyst Report) that boasts a strong portfolio of women’s magazines.

Recently, Meredith Corp. announced the launch of a new magazine Parents Latina targeting the Hispanic population in the United States. The magazine, which is slated to launch in spring 2015, will primarily revolve around Hispanic moms and would complement Ser Padres, a Spanish language magazine.

This leading media and marketing company informed that Parents Latina will be published 4 times a year with a circulation of 700,000, trailing Ser Padres that is published 8 times a year with a circulation of 850,000.

Meredith Corp. remains focused on bolstering advertising revenue, primarily in the digital space; enhancing online consumer transactions, especially magazine subscription orders; and non-advertising depending activities, including brand licensing, marketing services and e-Commerce, and attaining operational efficiencies.

The company is also growing in the digital space through acquisitions. Its most notable acquisitions in the recent past include Parenting and Babytalk magazines and related digital assets. Also, Meredith Corp. acquired Every Day with Rachael Ray and assets of FamilyFun magazine.

Moreover, Meredith Corp. remains focused on increasing brand visibility to drive up sales. The company extended its contract with Wal-Mart Stores Inc. (WMT - Analyst Report), which includes expanding Better Homes and Gardens branded home decor and garden program at latter’s stores across the United States and Canada. The company entered into agreements in Turkey and Italy to widen the reach of its renowned brands – such as Better Homes and Gardens, Parents and More, and Allrecipes.com.

Moreover, the company, which competes with Martha Stewart Living Omnimedia Inc. (MSO - Snapshot Report), is aggressively expanding its brands through online platforms, televisions, videos, mobile applications, and broadening its range of food and lifestyle content.

To sustain investor interest, the company maintains a share holder friendly program. By its Total Shareholder Return (TSR) strategy, the company intends to boost shareholder value through dividends, share repurchases and strategic investments in business to drive growth. The company has a history of making dividend payouts for 67 consecutive years.

However, Meredith Corp faces two significant challenges. First, the company derives a huge chunk of revenue from advertising, which is highly susceptible to fluctuations in the economy. Secondly, the prices of its primary raw material i.e. paper and postage remains highly volatile. Any unfavorable changes in the economy can lead to a sharp drop in the company’s revenues.

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

Key Pick from the Sector

Another better ranked publishing stock is Reed Elsevier plc (RUK - Snapshot Report) which carries a Zacks Rank #2 (Buy).

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