A month has gone by since the last earnings report for Meredith Corporation . Shares have added about 4.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Meredith Beats on Q2 Earnings, Maintains '17 View
Strategic endeavors, strong political advertising revenue at television stations and sturdy digital ad revenue in both the national and local businesses facilitated Meredith Corporation to deliver outstanding second-quarter fiscal 2017 results. The company posted adjusted earnings of $1.30 per share that surged 63% from the prior-year quarter and also outperformed the Zacks Consensus Estimate of $1.21.
Notably, this is the 13th straight quarter in which the company has delivered a positive earnings surprise. However, management reiterated its earnings per share guidance for fiscal 2017.
The company continues to expect adjusted earnings in the band of $3.50-$3.80 per share. For the third quarter earnings are anticipated to be in the range of $0.75-$0.80 per share. Including special items, Meredith envisions fiscal 2017 earnings between $3.78 and $4.08 per share.
Meredith’s total revenue came in at $442.6 million, up 9% year over year, and also came ahead of the Zacks Consensus Estimate of $434.6 million, after missing the same in the preceding two quarters.
The growth in the top line was supported by 11% surge in advertising revenue of $267.1 million, 1% jump in circulation revenue of $66.8 million and 10% increase in other revenues of $108.7 million. Total digital advertising revenue soared 16% in the quarter with traffic across Meredith's digital and mobile sites increased to approximately 90 million monthly unique visitors and video views rose 13%.
Adjusted operating profit came in at $99.9 million, up 56% from the prior-year period, while operating margin expanded 680 basis points to 22.6%.
Segment Details
Meredith’s National Media Group revenue fell 3% to $259.3 million due to a 2% decline in advertising revenue to $135.1 million and a 9% drop in other revenue to $57.4 million, partially offset by 1% increase in circulation revenue to $66.8 million. The segment’s adjusted operating profit totaled $34.3 million, almost flat year over year.
Digital advertising revenue jumped 16% on the back of Allrecipes, Parents and Shape brands, and represented 38% of total National Media Group advertising revenue. As per Publishers Information Bureau, Meredith's share of total magazine advertising revenue expanded 130 basis points to 13.8% led by robust performance of Family Circle, Allrecipes and EatingWell brands.
Meredith now expects National Media Group’s third quarter revenue to be flat to down marginally.
Revenues at the company’s Local Media Group segment climbed 31% to $183.3 million primarily due to an increase in political advertising revenue and other revenue. Political advertising revenue surged to $40 million from $798,000 while other revenue jumped 44% to $51.3 million. On the other hand, non-political advertising revenues declined 11% to $92 million. Digital advertising revenue increased 18%.
The segment’s adjusted operating profit came in at $78.9 million, up significantly from $40.4 million reported in the year-ago period.
Management now expects Local Media Group’s revenue to be flat to down marginally in the third quarter.
Strategic Endeavors
To fortify its position, Meredith has launched additional newscasts in the Atlanta, Phoenix, Portland, Nashville, Greenville and Flint/Saginaw markets. These endeavors enhanced Meredith's total local news and entertainment programming hours to 700 per week.
Meredith also renewed its licensing program with Wal-Mart Stores, Inc., which allows it to showcase 3,000 SKUs of Better Homes & Gardens branded products at 5,000 outlets and on Walmart.com. The company’s other new brand licensing programs, includes an EatingWell line of frozen foods; SHAPE fitness apparel; and Allrecipes cooking utensils. The company also enhanced its Better Homes and Gardens real estate program with Realogy Corporation.
Traffic at the world's largest food media, Allrecipes brand, jumped 13% to an average of over 55 million unique visitors per month. Meredith also launched a new national broadcast television series based on the Allrecipes brand. The company also launched “The Magnolia Journal”, a new quarterly lifestyle magazine.
Other Financial Details
Meredith ended the quarter with cash and cash equivalents of $44.5 million, long-term debt of $611.7 million and shareholders’ equity of $955.9 million. As of Dec 31, 2016, Meredith had $74 million remaining under its existing $100 million share repurchase authorization. The company generated cash flow from operations of $117.3 million in the first six months of fiscal 2017. The company hiked its dividend by over 8% to a $1.98 on an annual basis, which was the 23rd successive year of increase.
How Have Estimates Been Moving Since Then?
Following the release, the company witnessed a upward trend in fresh estimates. There have been two revisions higher for the current quarter.
VGM Scores
At this time, Meredith's stock has an average Growth Score of 'C', though it is doing a bit better on the momentum front with an 'B'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value and growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
Image: Bigstock
Why Is Meredith (MDP) Up 4.9% Since the Last Earnings Report
A month has gone by since the last earnings report for Meredith Corporation . Shares have added about 4.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Meredith Beats on Q2 Earnings, Maintains '17 View
Strategic endeavors, strong political advertising revenue at television stations and sturdy digital ad revenue in both the national and local businesses facilitated Meredith Corporation to deliver outstanding second-quarter fiscal 2017 results. The company posted adjusted earnings of $1.30 per share that surged 63% from the prior-year quarter and also outperformed the Zacks Consensus Estimate of $1.21.
Notably, this is the 13th straight quarter in which the company has delivered a positive earnings surprise. However, management reiterated its earnings per share guidance for fiscal 2017.
The company continues to expect adjusted earnings in the band of $3.50-$3.80 per share. For the third quarter earnings are anticipated to be in the range of $0.75-$0.80 per share. Including special items, Meredith envisions fiscal 2017 earnings between $3.78 and $4.08 per share.
Meredith’s total revenue came in at $442.6 million, up 9% year over year, and also came ahead of the Zacks Consensus Estimate of $434.6 million, after missing the same in the preceding two quarters.
The growth in the top line was supported by 11% surge in advertising revenue of $267.1 million, 1% jump in circulation revenue of $66.8 million and 10% increase in other revenues of $108.7 million. Total digital advertising revenue soared 16% in the quarter with traffic across Meredith's digital and mobile sites increased to approximately 90 million monthly unique visitors and video views rose 13%.
Adjusted operating profit came in at $99.9 million, up 56% from the prior-year period, while operating margin expanded 680 basis points to 22.6%.
Segment Details
Meredith’s National Media Group revenue fell 3% to $259.3 million due to a 2% decline in advertising revenue to $135.1 million and a 9% drop in other revenue to $57.4 million, partially offset by 1% increase in circulation revenue to $66.8 million. The segment’s adjusted operating profit totaled $34.3 million, almost flat year over year.
Digital advertising revenue jumped 16% on the back of Allrecipes, Parents and Shape brands, and represented 38% of total National Media Group advertising revenue. As per Publishers Information Bureau, Meredith's share of total magazine advertising revenue expanded 130 basis points to 13.8% led by robust performance of Family Circle, Allrecipes and EatingWell brands.
Meredith now expects National Media Group’s third quarter revenue to be flat to down marginally.
Revenues at the company’s Local Media Group segment climbed 31% to $183.3 million primarily due to an increase in political advertising revenue and other revenue. Political advertising revenue surged to $40 million from $798,000 while other revenue jumped 44% to $51.3 million. On the other hand, non-political advertising revenues declined 11% to $92 million. Digital advertising revenue increased 18%.
The segment’s adjusted operating profit came in at $78.9 million, up significantly from $40.4 million reported in the year-ago period.
Management now expects Local Media Group’s revenue to be flat to down marginally in the third quarter.
Strategic Endeavors
To fortify its position, Meredith has launched additional newscasts in the Atlanta, Phoenix, Portland, Nashville, Greenville and Flint/Saginaw markets. These endeavors enhanced Meredith's total local news and entertainment programming hours to 700 per week.
Meredith also renewed its licensing program with Wal-Mart Stores, Inc., which allows it to showcase 3,000 SKUs of Better Homes & Gardens branded products at 5,000 outlets and on Walmart.com. The company’s other new brand licensing programs, includes an EatingWell line of frozen foods; SHAPE fitness apparel; and Allrecipes cooking utensils. The company also enhanced its Better Homes and Gardens real estate program with Realogy Corporation.
Traffic at the world's largest food media, Allrecipes brand, jumped 13% to an average of over 55 million unique visitors per month. Meredith also launched a new national broadcast television series based on the Allrecipes brand. The company also launched “The Magnolia Journal”, a new quarterly lifestyle magazine.
Other Financial Details
Meredith ended the quarter with cash and cash equivalents of $44.5 million, long-term debt of $611.7 million and shareholders’ equity of $955.9 million. As of Dec 31, 2016, Meredith had $74 million remaining under its existing $100 million share repurchase authorization. The company generated cash flow from operations of $117.3 million in the first six months of fiscal 2017. The company hiked its dividend by over 8% to a $1.98 on an annual basis, which was the 23rd successive year of increase.
How Have Estimates Been Moving Since Then?
Following the release, the company witnessed a upward trend in fresh estimates. There have been two revisions higher for the current quarter.
Meredith Corporation Price and Consensus
Meredith Corporation Price and Consensus | Meredith Corporation Quote
VGM Scores
At this time, Meredith's stock has an average Growth Score of 'C', though it is doing a bit better on the momentum front with an 'B'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value and growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.