Hmm, "MD" could stand for Mother's Day, so happy Mother's Day everyone! I thought I'd continue my series of looking at new stocks in the top 25 (since October 2007). MDP is Meredith, a old school magazine publisher (thing Better Homes and Gardens) in Iowa.
It doesn't take a rocket scientist to know that magazine publications are on the decline (like radio stations, CD sales and newspapers) as more and more people use the internet. That being said, some publishers do have a very steady cash flow and there is value in that flow. Also, many publishers have internet properties which may be increasing in value.
Here their MFI calc:
mdp
+ Operating Income After Depreciation 300.67
- Minority Interest - Income Account -
= Income for Calculation 300.67
Market Cap Yahoo 1,580,000
Share Price 34.20
+ Market Cap Calc 1,580.00
+ Preferred Capital -
+ Debt in Current Liabilities 125.00
+ Long-Term Debt 320.00
Cash and Short-Term Investments 45.48
- Excess Cash 34.72
= Enterprise Value 1,990.28
+ Property Plant and Equipment - Net 194.13
+ Receivables 255.58
+ Inventories 62.97
+ Other Current Assests 103.80
+ Working Cash 10.76
- Accounts Payable 101.07
- Current Liabilities - Other 332.03
= Invested Capital 194.13
Earnings Yield 15%
ROIC 155%
So they made about $300m before taxes in operating earnings in the past 12 months. Analysts expect them to be down one or two percent this year and then to grow slightly. This is not a growth industry. They do pay a 2.5% dividend. They are trading at $34.20, which is at the low end of their 52 week range of $30.52 - $63.41. MDP has $320m of debt, they have debt coverage of about 12x with their income.
This is certainly a "cheap"company. Not sure it is a great company, in the mold of Jason's gum shops as this is a very mature industry. I will keep them on my watch list.
That is enough rambling... I am off to read the "Family Circle" on my dining room table.
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1 comment:
My first thought when reading this was, "Great, Idearc Part II." Then of course I see the very large difference in, for example, the debt levels of each company. Still, I question the reliability of these cash flows if there has been/is ongoing a paradigm shift with regard to print/magazine publication. The company may be cheap right now, but maybe in a year or two, with flat to declining revenues, and little prospects for improvements, the stock is appropriately priced.
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