Back to top

Analyst Blog

Zacks Equity Research

John Wiley & Sons (JW.A) Stock Up on Q4 Earnings, Sales Beat

PSO NTN JW.A NYT

Trades from $3
Read Full ArticleHide Full Article

John Wiley & Sons Inc. (JW.A - Free Report) posted better-than-expected earnings for the third consecutive quarter, when the company reported fourth-quarter fiscal 2017 results. Moreover, total revenue also surpassed expectations, after missing the same in the preceding quarter.

John Wiley & Sons reported adjusted earnings of 82 cents per share that beat the Zacks Consensus Estimate of 66 cents and also increased from 67 cents in the year-ago quarter. The company’s performance in the reported quarter was primarily driven by solid performance of Solution business as well as favorable timing of sales in publishing.

Further, the company reported revenues of $452.2 million, up 4% year over year and also outpaced the Zacks Consensus Estimate of $429 million.

On a constant currency (cc) basis, adjusted earnings rose 19% year over year while revenues gained 6%. Including one-time charges, the company reported earnings of 81 cents compared with 59 cents in the prior-year quarter.

Adjusted operating income came in at $61.7 million, up 20% (up 16% at cc) from the year-ago quarter. However, adjusted operating margin expanded 190 basis points to 13.7%.

Following robust quarterly numbers, the company’s shares gained 4.6% on June 13. In fact, the shares have gained 2% in the past three months, in line with the Zacks categorized Publishing-Books industry.

Segment Details

Research: The division’s adjusted revenues of $234.5 million increased 2% year over year, fueled by double digit growth in Author-Funded Access and Atypon acquisition. The segment’s adjusted direct contribution to profit was $113.9 million that increased 0.3% from last year. After accounting for shared services and administrative expenses, the division’s adjusted contribution to profit was $80.3 million, down 0.1% from the prior-year quarter.

Publishing: Revenues at the division increased 5% to $153.7 million on account of solid growth Education Books, Online Test Preparation and Certification along with Course Workflow/WileyPLUS which overshadowed the decline in STM and Professional Books as well as Licensing, Distribution, Advertising and Other. Adjusted direct contribution to profit by the division rose 13% year over year to $70.7 million. Further, contribution after allocating shared services and administrative, the division’s adjusted operating profit came in at $31.1 million, up 109% year over year.

Solutions: Revenues increased 13% year over year to $64 million, boosted by robust performance of Online Program Management, Professional Assessment and Corporate Learning. The division’s adjusted direct contribution to overall profit was nearly $13 million, up 2% year over year. Adjusted contribution to profit after allocating shared services and administrative expenses came in at $5.9 million in comparison with $4.5 million recorded in the year-ago quarter.

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

 

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

Other Financial Details

The company ended the quarter with cash and cash equivalents of $58.5 million, sharply down from the year-ago quarter of $363.8 million primarily due to Atypon acquisition. Notably, the company used nearly $120 million of cash for the acquisition. Net debt at the end of quarter was $306.5 million, compared with $241.2 million at the end of fourth-quarter fiscal 2016.

John Wiley & Sons reported free cash flow of $166.2 million at the end of fourth-quarter fiscal 2017, compared with $219 million in the year-ago period.

Nevertheless, the company bought back 282,728 shares for $15 million in the reported quarter, leaving nearly 3.8 million shares pending under the standing authorization.

Outlook

John Wiley & Sons provided fiscal 2018 guidance. Both revenues and operating income (at cc) is expected to be nearly flat year over year. The company expects adjusted earnings (at cc) to be down by low-single digits. Meanwhile, cash from operations is expected to increase to $350 million, in comparison with $315 million.

The company anticipates low-single digit revenues growth in Research as well as low-double digit revenue growth in Solutions. However, Publishing revenues are expected to decline by high-single digit due to softness in print market.

John Wiley currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks worth considering include The New York Times Company (NYT - Free Report) Pearson plc (PSO - Free Report) and NTN Buzztime, Inc. (NTN - Free Report) . All these three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

New York Times has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 31.4%.

In the past three months, shares of Pearson have gained more than 21%.

NTN Buzztime has an impressive long-term earnings growth rate of 20%.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>