It has been about a month since the last earnings report for Nielsen (NLSN - Free Report) . Shares have lost about 9.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nielsen due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Nielsen Earnings & Revenues Beat Estimates in Q1
Nielsen Holdings plc reported first-quarter 2019 adjusted net earnings of 35 cents per share, beating the Zacks Consensus Estimate of 31 cents. However, the figure was down 12.5% from the year-ago quarter.
Moreover, total revenues came in at $1.563 billion, decreasing 2.9% year over year. However, the reported revenues increased 0.4% on a constant-currency basis and marginally surpassed the Zacks Consensus Estimate of $1.561 billion.
Global Media revenues during the first quarter were $826 million (accounting for 53% of its total revenues), reflecting an increase of 0.2% from the year-ago level or 1.3% on a constant-currency basis. Also, Audience Measurement revenues increased 1.5% from the prior-year quarter, driven by continued client adoption of Total Audience Measurement system, partly offset by pressure in local television measurement. However, Plan/Optimize revenues decreased 3.1% year over year or 0.9% on a constant-currency basis. Excluding the impact of acquisitions and one-time items, Plan/Optimize revenues were flat on a constant-currency basis.
Global Connect revenues during the quarter were $737 million (47% of the total revenues), reflecting a decrease of 6.2% from the year-ago period or 0.7% on a constant-currency basis.
Revenues in Measure decreased 4.3% year over year. Excluding foreign currency impact, revenues increased 1.7%, reflecting strong retail measurement services and improved trends in the United States. However, Predict/Activate revenues decreased 11.2% from the year-ago quarter or 6.6% on a constant-currency basis. The decrease was due to continued softness in areas such as custom analytics.
Gross margin was 55.5%, down 20 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative, were $480 million, decreasing 2.6% from the year-ago figure.
Adjusted EBITDA was $415 million in the first quarter, decreasing 1.9% from the prior-year level. However, adjusted EBITDA margin expanded 28 bps to 26.6% as productivity initiatives were offset by product mix and investments in growth initiatives.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $530 million compared with $524 million in the last reported quarter.
Net debt (gross debt excluding cash and cash equivalents) was $8.23 billion, and net debt leverage ratio was 4.47 at the end of the quarter.
Cash flow from operations was ($43) million, capex totaled $122 million and free cash flow amounted to ($165) million in the first quarter.
Management reiterated its guidance for full-year 2019. It expects total revenues to be approximately $6.4 billion on a constant-currency basis. Adjusted earnings per share are expected to remain in the range of $1.63-$1.77.
The company also expects free cash flow in the range of $525-$575 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
At this time, Nielsen has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Nielsen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.