It has been about a month since the last earnings report for The Madison Square Garden Company (MSG - Free Report) . Shares have added about 2.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is The Madison Square Garden Company due for a pullback? 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 catalysts.
Madison Square Garden Q3 Earnings Beat, Sales Miss Estimates
Madison Square Garden reported mixed third-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Notably, this marked the company’s third straight quarter of earnings beat.
In the quarter under review, earnings came in at $1.48 per share, exceeding the consensus estimate $1.38. In the prior-year quarter, the company reported earnings of 38 cents per share. Net revenues totaled $517.2 million, which missed the consensus mark of $526 million but improved 12.5% year over year.
Madison Square Garden operates under two segments —MSG Entertainment and MSG Sports.
Revenues from the Madison Square’s Entertainment segment totaled $166.5 million, up 4% year over year. The upside can be attributed to higher TAO Group revenues and surge in revenues for the Christmas Spectacular Starring the Radio City Rockettes production.
The segment’s adjusted operating income came in at $7.2 million, down 34.7% from the prior-year quarter number. The metric declined primarily due to a rise in direct operating expenses and selling, general and administrative expenses, which was marginally overshadowed by increase in revenues.
Revenues from the Sports segment rose 17% to $351.6 million. Increase in local media rights fees from MSG Networks, and higher suite license fee revenues and professional sports teams’ ticket-related revenues led to the uptick.
The segment recorded adjusted operating income of $103.1 million, up 74% from the year-ago quarter. This improvement reflects revenue growth, which overshadowed higher direct operating expenses, and selling, general and administrative expenses.
In the quarter under review, Madison Square Garden reported adjusted operating income of $54.1 million, up from $50.1 million year over year.
Cash and cash equivalents totaled $1.15 billion as of Mar 31, 2019, compared with $1.22 billion as of Jun 30, 2018. The company ended the fiscal third quarter with long-term debt of nearly $91 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 -8.09% due to these changes.
Currently, The Madison Square Garden Company has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
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.