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Factors to Influence John Wiley & Sons (JW.A) Earnings in Q1

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John Wiley & Sons Inc. is scheduled to report first-quarter fiscal 2018 financial numbers before the opening bell on Sep 7.

The company registered a positive earnings surprise of 24.2% in fourth-quarter fiscal 2017. Notably, the company’s earnings have surpassed the Zacks Consensus Estimate by an average of 8.3% in the trailing four quarters.

What to Expect?

The question lingering in investors’ minds now is whether John Wiley & Sons will be able to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 53 cents, reflecting a year-over-year increase of nearly 2%. We note that the Zacks Consensus Estimate has been stable in the past 30 days. Analysts polled by Zacks expect revenues of $400 million, compared with $404 million reported in the prior-year quarter.

Factors Influencing this Quarter

John Wiley & Sons continues to face weak demand for printed books, due to the shift from print to digital and increased share of rentals. Evidently, revenues for publishing declined 7% in fiscal 2017 with books witnessing a fall of 11% primarily due to softness in print market. However, ,publishing revenues rose 7% driven by 6% increase in overall books and 28% in education books in the fourth quarter. Nevertheless, management has cautioned that the overall book market will remain under pressure in the near future and doesn’t expect the fourth quarter growth to continue. To counter the decline, management is revamping its portfolio of books to focus on higher value content and optimize expenses accordingly.

In fiscal 2018, the company anticipates the overall business to be steady but softness in print book markets will continue to persist. In fiscal 2018, it projects adjusted earnings at constant currency to decline by low single-digits. Both revenues and operating income (at constant currency) is expected to be nearly flat year over year.

However, the company is focusing on building a more favorable product mix as digital services/products generate higher margins and are likely to offset the declining revenue from print media. Notably, the company’s revenues from digital sources increased to 68% in fiscal 2017 from 63% in fiscal 2016 driven by Atypon acquisition and robust growth in Solutions businesses. Further, the company stated that it is changing its online library to Atypon Literatum platform which will not only accelerate its technology roadmap but will also provide cost savings.

John Wiley & Sons, Inc. Price, Consensus and EPS Surprise

 

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that John Wiley & Sons is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. John Wiley & Sons has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 53 cents. The company carries a Zacks Rank #3 (Hold). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

G-III Apparel Group, Ltd. (GIII - Free Report) has an Earnings ESP of +4.76% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +1.54% and a Zacks Rank #3.

RH (RH - Free Report) has an Earnings ESP of +2.88% and a Zacks Rank #3.

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