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Why Is The Madison Square Garden Company (MSG) Up 2.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for The Madison Square Garden Company (MSG - Free Report) . Shares have added about 2.2% 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's Q1 Loss Wider Than Expected

The Madison Square Garden Company reported first-quarter fiscal 2020 results, with earnings and revenues lagging the Zacks Consensus Estimate. The bottom line fell short of the Zacks Consensus Estimate for the second consecutive quarter, whereas the top line lagged the same for the third straight quarter.

In the quarter under review, the company incurred a loss of $3.36 per share, wider than the Zacks Consensus Estimate of a loss of $2.29. In the prior-year quarter, Madison Square Garden had incurred a loss of $1.36 per share. Net revenues totaled $214.8 million, which missed the consensus mark of $234 million and dipped 1.5% year over year.

Segmental Performance

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

Revenues from the Entertainment segment totaled $159 million, down 2% year over year. The downside was caused by decline in event-related revenues at the company's venues. The winding down of Obscura Digital’s third-party business impacted the segment’s revenues.

The segment’s adjusted operating income came in at $6.2 million compared with operating income of $9 million in the prior-year quarter. The metric fell primarily due to a sharp decline in revenues.

Revenues in the Sports segment inched up 1% to $56 million, courtesy of robust revenues from other live sporting events. However, the gain was partially overshadowed by decline in ticket-related revenues.

The segment’s adjusted operating loss came in at $13.7 million compared with operating income of $0.6 million in the prior-year quarter. The loss was caused by higher direct operating expenses and selling, general and administrative expenses.

Operating Income

In the quarter under review, Madison Square Garden incurred adjusted operating loss of $41.1 million compared with operating loss of $9.9 million in the year-ago quarter.

Balance Sheet

Cash and cash equivalents totaled $952.2 million as of Sep 30, 2019 compared with $1.1 billion as of Jun 30, 2019. The company ended the fiscal first quarter with long-term debt of nearly $47.4 million compared with $48.6 million at the end of Jun 30, 2019.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, The Madison Square Garden Company has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, The Madison Square Garden Company has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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