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The Madison Square Garden Company (MSG) Down 0.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for The Madison Square Garden Company (MSG - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is The Madison Square Garden Company due for a breakout? 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.

Madison Square Reports Narrower-Than-Expected Q1 Loss

Madison Square reported better-than-expected results in the first quarter of fiscal 2019. The company reported narrower-than-expected loss and its revenues surpassed the Zacks Consensus Estimate.

Madison Square incurred adjusted loss per share of $1.36, wider than the consensus estimate of loss of $1.87. In the prior-year quarter, the company incurred loss of 47 cents per share.

Net revenues were $218.1 million, which surpassed the consensus mark of $208 million by 4.8% but fell 11% year over year.

Segmental Performance

Madison Square operates under two segments — MSG Sports and MSG Entertainment.

In the quarter under review, revenues from Madison Square’s Entertainment segment totaled $163 million, down 1% year over year. The downside was due to lower overall event-related revenues at the company's venues and lesser suite rental fee revenues. The fall in revenues was partially offset by increased revenues from TAO Group, higher sponsorship, and signage and inclusion of Obscura Digital results.

The segment’s operating income came in at $1.7 million, down from $8.4 million in the prior-year quarter. The decrease in operating income was due to higher selling, general and administrative expenses, and increased direct operating expenses coupled with lower revenues.

Revenues from the Sports segment declined 32% to $55.4 million. The downside can be attributed to the timing of local media rights revenues from MSG Networks Inc. as well as lower suite rental fee revenues. However, the decline was partially offset by an increase in revenues from league distributions.

The segment recorded operating loss of $4.1 million, up by $24.5 million from the year-ago quarter. The wider loss reflects greater selling, general and administrative expenses, and lower revenues, partially offset by a decrease in direct operating expenses.

Operating Income

In the reported quarter, Madison Square incurred adjusted loss of $9.9 million, narrower than the adjusted loss of $30.1 million in the year-ago quarter.

Balance Sheet

Cash and cash equivalents totaled $1.06 billion as of Sep 30, 2018, compared with $1.22 billion as of Jun 30, 2018. The company ended the reported quarter with long-term debt of $100.9 million compared with $101.3 million at the end of fiscal 2018.


 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -37.47% due to these changes.

VGM Scores

Currently, The Madison Square Garden Company has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, The Madison Square Garden Company has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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