Shares of Reed Elsevier NV (ENL) have been steadily moving higher since mid-2012, and are now hovering close to their 52-week high. This professional information solutions provider has amassed a year-to-date return of 32%, demonstrating its strong fundamentals. Furthermore, earnings estimates for 2012 and 2013 have shown an upward trend in the last 30 days.
There are several catalysts for this Zacks #1 Rank (Strong Buy) moving forward, including its impressive balance sheet and cash flow generation capability, its diversified business portfolio, acquisitions, divestment activities and its high potential markets.
Reed Elsevier came out with its nine-month results on November 8, 2012. The company witnessed an underlying revenue increase of 4%. Excluding the impact of biennial exhibition cycling, underlying revenue grew 3%. Positive contribution from all five segments set the stage for growth, and the companys underlying revenue and profit upside remain on track.
Looking at segments, the company registered underlying revenue growth of 15% in Reed Exhibitions, 6% in LexisNexis Risk Solutions, 2% in Elsevier, and 1% in LexisNexis Legal & Professional and Reed Business Information each.
To counter the sluggish economic condition and to improve its profitability, Reed Elsevier is now concentrating on those revenue generating avenues that are subscription based and are recurring in nature. The company is also gradually shying away from cyclical advertising-related revenues and print-based products.
Earnings Estimates Edge Upward
The Zacks Consensus Estimate for 2012 rose 1.7% to $2.36 per share in the last 30 days. For 2013, the Zacks Consensus Estimate climbed 4.7% to $2.43 over the same time frame.
Shares Showing Strength
Barring a few occasional pull backs, shares of Reed Elsevier have been trending upward since the beginning of June. It's now hovering close to its 52-week high, reflecting bullish momentum for the rest of 2012. The stock has been consistently trading above its 200-day moving average since August 3. It has also remained above the 50-day moving average since November 23.
Volume averages roughly 35K daily. The year-to-date return for the stock is 32% compared with the S&P 500s return of 10.4%.
Founded in 1903 and based in Amsterdam, the Netherlands, Reed Elsevier is a provider of professional information solutions to science and medical, legal, risk management, and corporate, primarily in North America and Europe. Its 5 divisions are Elsevier, LexisNexis Risk Solutions, LexisNexis Legal & Professional, Reed Exhibitions, and Reed Business Information. Reed Elsevier, which primarily competes with Wolters Kluwer NV (WTKWY), has a market cap of $10.86 billion.
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