Meredith (MDP) Will Rebound Right Along with Ad Spending - Barron's
Tweet
Share
E-mailGet Alerts MDP Hot Sheet
Join SI Premium – FREE
When it comes to women's magazines about lifestyle, fitness, family, and friends, there's one name everyone turns to:
Oprah.
But in lieu of the big O, investors might take a hard look at Meredith Corp. (NYSE: MDP), another leading name in the women's entertainment sector.
In a report over the weekend, Barron's notes that Meredith might have the right combination to deliver big gains for investors, and the only subscription needed is a couple shares of the stock.
Along with about 80 million unique readers picking up one of Meredith's magazines, the company also boasts 12 local television stations in growing markets.
Meredith then takes what it knows about middle-age, middle-class Americans and provides corporations with better marketing tools. Just like an old-fashioned Google (Nasdaq: GOOG).
And the technique is a cash cow for Meredith, which has -- according to Barron's -- generated about $180 million annually over the last five years. This cash has allowed Meredith to boost its dividend 50 percent to $1.53 per share, currently yielding 5.7 percent.
With Meredith shares falling about 21 percent over the last year, and 51 percent in the last four, valuation is also becoming attractive. Shares currently go for about 10.2 times next years earnings expectations, and 0.9 times expected sales for next year. Barron's estimates that the numbers indicate a potential rally to the mid-$30s in 2012, for an overall return -- inclusive of dividends -- nearing 30 percent.
Meredith is also somewhat cyclical; its local TV stations tend to do better during election years -- when politicians spend on ads -- and flatten out thereafter. For 2012, earnings are expected to dip 6 percent to $2.62, and gain 16 percent to $3.05 per share in 2013. With a recent 2010 Supreme Court ruling loosening the restrictions on campaign spending, the $3.5 billion political ad market might double, or more, in a best case scenario. Though Meredith doesn't see that happening, investors can't help but wonder whether or not spending will at least ramp a little, as races tighten up.
For 2011, investors have been weary of magazine ad numbers. It's primary source of ad revs, from food companies, was trimmed as commodity costs continued to escalate. Though input costs are expected to drop, food companies are feeling more and more confident passing those on to customers, freeing up more ad dollars along the way.
Meredith is up over 2 percent Monday, heading into the close of trading.
Oprah.
But in lieu of the big O, investors might take a hard look at Meredith Corp. (NYSE: MDP), another leading name in the women's entertainment sector.
In a report over the weekend, Barron's notes that Meredith might have the right combination to deliver big gains for investors, and the only subscription needed is a couple shares of the stock.
Along with about 80 million unique readers picking up one of Meredith's magazines, the company also boasts 12 local television stations in growing markets.
Meredith then takes what it knows about middle-age, middle-class Americans and provides corporations with better marketing tools. Just like an old-fashioned Google (Nasdaq: GOOG).
And the technique is a cash cow for Meredith, which has -- according to Barron's -- generated about $180 million annually over the last five years. This cash has allowed Meredith to boost its dividend 50 percent to $1.53 per share, currently yielding 5.7 percent.
With Meredith shares falling about 21 percent over the last year, and 51 percent in the last four, valuation is also becoming attractive. Shares currently go for about 10.2 times next years earnings expectations, and 0.9 times expected sales for next year. Barron's estimates that the numbers indicate a potential rally to the mid-$30s in 2012, for an overall return -- inclusive of dividends -- nearing 30 percent.
Meredith is also somewhat cyclical; its local TV stations tend to do better during election years -- when politicians spend on ads -- and flatten out thereafter. For 2012, earnings are expected to dip 6 percent to $2.62, and gain 16 percent to $3.05 per share in 2013. With a recent 2010 Supreme Court ruling loosening the restrictions on campaign spending, the $3.5 billion political ad market might double, or more, in a best case scenario. Though Meredith doesn't see that happening, investors can't help but wonder whether or not spending will at least ramp a little, as races tighten up.
For 2011, investors have been weary of magazine ad numbers. It's primary source of ad revs, from food companies, was trimmed as commodity costs continued to escalate. Though input costs are expected to drop, food companies are feeling more and more confident passing those on to customers, freeing up more ad dollars along the way.
Meredith is up over 2 percent Monday, heading into the close of trading.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Delta Air Lines stock climbs on earnings beat and strong guidance
- BTIG Starts Digital Realty Trust (DLR) at Buy
- Barclays upgrades CubeSmart, cuts Public Storage on relative valuation
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
Barron's, Dividend, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
