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Nielsen's (NLSN) Subsidiaries Price $1 Billion Senior Notes

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Nielsen Holdings N.V.'s (NLSN - Free Report) subsidiaries, Nielsen Finance LLC and Nielsen Finance Co., recently announced their intention to offer $1 billion of senior notes in a private offering.

The company plans to offer $500 million of senior notes due 2028 and $500 million notes due 2030 in separate offerings.

The offering is subject to market and other conditions. Also, the company stated that the notes are exempted from the registration requirements under the Securities Act of 1933.

In addition, Nielsen issued a Conditional Notice of Partial Redemption to holders of 5.500% senior notes due 2021 and 5.000% senior notes due 2022 to partially redeem $275 million and $725 million, respectively.

It expects to use net proceeds from the proposed offering to fund the partial redemptions of the 2021 and 2022 notes.

Cash Position

At the end of second-quarter 2020, Nielsen’s cash and short-term investments totaled $438 million, up from $359 million on Mar 31, 2020.

Gross debt was $8.42 billion compared with $8.41 billion at the end of the prior quarter. Net debt (gross debt excluding cash and cash equivalents) was $7.98 billion and net debt leverage ratio was 4.46 at quarter-end.

Cash flow from operations increased to $250 million from ($5) million in the first quarter. Further, capex totaled $120 million and free cash flow amounted to $130 million for the second quarter.

In our view, the stock offering is expected to boost financial flexibility and help the company meet financial obligations in an efficient way. Moreover, the offering will provide it with ample scope to deploy capital for long-term growth opportunities and rewarding higher returns to stockholders.

Bottom Line

Nielsen’s ongoing focus on operational efficiency is driving growth. We believe the company’s consistent investment in the product portfolio is expected to continue aiding business growth. Positive contributions from acquisitions are also driving its growth.

However, Nielsen is being impacted by unimpressive performance in the emerging markets served. The company’s ongoing investments in technology and infrastructure remain risks for margin expansion.

Nevertheless, Nielsen’s growing client adoption is expected to drive the top line in the near term. With a strong position in the television audience measurement market and focus on innovation, the company expects to gain new clients as well as potential opportunities from the existing customers.

Zacks Rank & Other Stocks to Consider

Currently, Nielsen carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Dropbox (DBX - Free Report) , Etsy, Inc. (ETSY - Free Report) and Maxim Integrated Products, Inc. (MXIM - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate of Dropbox, Etsy and Maxim is pegged at 34.4%, 26.5% and 10%, respectively.

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