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Nielsen Holdings plc reported adjusted third-quarter 2016 earnings of 74 cents per share, above the Zacks Consensus Estimate of 72 cents.
Revenues
Reported revenues came in at $1.57 billion, up 2.5% year over year on the back of solid performance by the company’s Buy and Watch businesses. However, revenues were slightly below the Zacks Consensus Estimate of $1.592 billion.
On a constant currency basis, revenues increased 3.6%.
Revenues by Segment
Buy business revenues were $809million (52% of total revenue), down0.9% year over year but up 0.9% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed market was down 2.5% due to softness in the discretionary services, especially in the U.S. market. However, revenues from emerging markets were up 8.5% on a constant currency basis.
Watch business revenues were $761million (48%), up 6.4% year over year or 6.7% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and Marketing Effectiveness, which improved 8.5% and 31.8%, respectively, on a constant currency basis.
Operating Results
Reported gross margin was 59.1%, down 70 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of$452 million, decreased 1.5% from the year-ago figure of $459 million. Operating margin decreased 60 bps year over year to 18.9%.
Net Income
On a GAAP basis, Nielsen recorded net profit of $130 million or 36 cents per share compared with $142 million or 38 cents in the year-ago quarter.
On an adjusted basis, net profit per share came in at 74cents compared with 69 cents a year ago.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $446 million against $346 million last quarter.
Net debt (gross debt excluding cash and cash equivalents) was $7.511 billion and net debt leverage ratio was 3.91x at the end of the quarter.
Cash flow from operations was $456 million in the third quarter versus $210 million in the prior quarter and $454 million in the year-ago quarter. Free cash flow was $353 million in the third quarter versus $98 million in the prior quarter and $347 million in the year-ago quarter.
Share Repurchases
Nielsen repurchased $90 million of its stock during the third quarter. The company has a total of $460 million remaining under the existing repurchase program, which it expects to utilize by the end of 2017.
For full-year 2016, management expects total revenue growth on a constant currency basis in the range of 3.5% to 4.0%, adjusted EBITDA margin growth of30 basis points, and adjusted net income per share in the range of $2.73 to$2.79. Also, free cash flow is expected to be approximately $850 million.
Our Take
Nielsen Holdings is an information and measurement company which offers media and marketing information on what consumers watch and buy both locally and locally. The company reported decent third-quarter results, with the bottom line beating the Zacks Consensus Estimate and the top line missing the same.
Continued dividend payment and share repurchase reflect Nielsen’s financial strength and commitment to return value to its 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 forward.
Intel delivered a positive earnings surprise of 12.14%, on average, in the trailing four quarters.
Applied Materials witnessed a 2.53% gain in its last day’s stock price. On average, the company delivered a positive earnings surprise 5.05% in the trailing four quarters.
ON Semiconductor witnessed a 2.28% gain in its last day’s stock price. On average, the company delivered a positive earnings surprise 4.58% in the trailing four quarters.
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Nielsen (NLSN) Beats Q3 Earnings Estimates, Lags Revenue
Nielsen Holdings plc reported adjusted third-quarter 2016 earnings of 74 cents per share, above the Zacks Consensus Estimate of 72 cents.
Revenues
Reported revenues came in at $1.57 billion, up 2.5% year over year on the back of solid performance by the company’s Buy and Watch businesses. However, revenues were slightly below the Zacks Consensus Estimate of $1.592 billion.
On a constant currency basis, revenues increased 3.6%.
Revenues by Segment
Buy business revenues were $809million (52% of total revenue), down0.9% year over year but up 0.9% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed market was down 2.5% due to softness in the discretionary services, especially in the U.S. market. However, revenues from emerging markets were up 8.5% on a constant currency basis.
Watch business revenues were $761million (48%), up 6.4% year over year or 6.7% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and Marketing Effectiveness, which improved 8.5% and 31.8%, respectively, on a constant currency basis.
Operating Results
Reported gross margin was 59.1%, down 70 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of$452 million, decreased 1.5% from the year-ago figure of $459 million. Operating margin decreased 60 bps year over year to 18.9%.
Net Income
On a GAAP basis, Nielsen recorded net profit of $130 million or 36 cents per share compared with $142 million or 38 cents in the year-ago quarter.
On an adjusted basis, net profit per share came in at 74cents compared with 69 cents a year ago.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $446 million against $346 million last quarter.
Net debt (gross debt excluding cash and cash equivalents) was $7.511 billion and net debt leverage ratio was 3.91x at the end of the quarter.
Cash flow from operations was $456 million in the third quarter versus $210 million in the prior quarter and $454 million in the year-ago quarter. Free cash flow was $353 million in the third quarter versus $98 million in the prior quarter and $347 million in the year-ago quarter.
Share Repurchases
Nielsen repurchased $90 million of its stock during the third quarter. The company has a total of $460 million remaining under the existing repurchase program, which it expects to utilize by the end of 2017.
For full-year 2016, management expects total revenue growth on a constant currency basis in the range of 3.5% to 4.0%, adjusted EBITDA margin growth of30 basis points, and adjusted net income per share in the range of $2.73 to$2.79. Also, free cash flow is expected to be approximately $850 million.
Our Take
Nielsen Holdings is an information and measurement company which offers media and marketing information on what consumers watch and buy both locally and locally. The company reported decent third-quarter results, with the bottom line beating the Zacks Consensus Estimate and the top line missing the same.
Continued dividend payment and share repurchase reflect Nielsen’s financial strength and commitment to return value to its 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 forward.
Currently, Nielsen carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Intel Corp. (INTC - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and ON Semiconductor Corp. (ON - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intel delivered a positive earnings surprise of 12.14%, on average, in the trailing four quarters.
Applied Materials witnessed a 2.53% gain in its last day’s stock price. On average, the company delivered a positive earnings surprise 5.05% in the trailing four quarters.
ON Semiconductor witnessed a 2.28% gain in its last day’s stock price. On average, the company delivered a positive earnings surprise 4.58% in the trailing four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>