Meredith Corporation MDP reported adjusted earnings of 71 cents per share for the third quarter of fiscal 2015, ahead of the Zacks Consensus Estimate of 68 cents and up 1.4% on a year-over-year basis.
Meredith Corporation - Earnings Surprise | FindTheCompany
Including certain one-time items, the company reported earnings of 56 cents, up 36.6% year over year.
The company continues to gain from improvement in advertising as well as in the digital section and favorable outcome from the recently acquired assets including the rights to Martha Stewart Living and Martha Stewart Weddings magazines and the www.marthastewart.com and www.marthastewartweddings.com websites from Martha Stewart Living Omnimedia Inc. MSO. Digital advertising revenues grew 55% in the quarter with National media reporting a 60% increase and Local media reporting a 30% rise.
However, management somewhat skewed its earnings per share guidance for fiscal 2015. The company now expects earnings to be around $3.26 to $3.31 as against earlier forecast of $3.25 to $3.35.
Further, fourth-quarter adjusted earnings per share are expected to be in the arnge of 90-95 cents per share compared with adjusted earnings of 88 cents reported in the prior-year quarter. The Zacks Consensus Estimate for the fourth quarter and fiscal 2015 are pegged at 98 cents and $3.31, respectively.
Revenues & Margins
Total revenue for the quarter grew 8.3% to $398.2 million but missed the Zacks Consensus Estimate of $401 million. Top-line growth was driven by a 13.1% increase in Advertising revenues to $206 million and 7.8% growth in Other revenues to $96.1 million, that offset flattish Circulation revenues.
For the fourth quarter of fiscal 2015, total revenue is anticipated to increase in the high-single digits range.
Adjusted operating profit rose 11.8% year over year to $58.4 million.
Segment Details
Meredith’s National Media Group revenues were up 2.1% year over year to $275.3 million due to a 5.5% rise in advertising revenues to $118 million, that offset marginal fall in circulation as well as other revenues. The segment’s adjusted operating profit rose 0.6% to $33.6 million.
Meredith now projects National Media Group revenues to increase in mid to high-single digits in the fourth quarter of fiscal 2015.
Meredith’s Local Media Group revenues rose nearly 25.7% to $122.9 driven by acquisition of MOV in St. Louis, KTVK in Phoenix and WGGB in Springfield and over 30% growth in digital revenues and higher retransmission fees. Also, in the quarter, non-political advertising revenues grew 26% to $88 million and Other revenues grew 27.2% to $34.8 million whereas political advertising revenues were down 47.6% to $279 million. The segment’s adjusted operating income grew over 14% to $32 million.
Management now expects Local Media Group’s revenues to increase in the mid-teens.
Other Financial Details
Meredith ended the year with cash and cash equivalents of $19.7 million, total debt of $826 million and shareholders’ equity of $929.7 million. During the quarter, the company bought back 830,000 shares. Moreover, the company raised its dividend by 6% to $1.83 per share.
As of Mar 31, 2015, Meredith had $97 million remaining under its existing share repurchase authorization. The company’s leverage ratio (debt to EBITDA) was 2.7 to 1 for the 12 month-period ended Mar 31, 2015.
Currently, Meredith carries a Zacks Rank #3 (Hold).
Other Stocks
Better-ranked stocks in the retail sector include The Walt Disney Company DIS and New Media Investment Group Inc. NEWM. Both carrying a Zacks Rank #2 (Buy).
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