Should Meredith Investors Be Concerned About A Stock Dip?

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Zacks Equity Research is at it again. Last week, it questioned if Entercom is “positioned for a slump” and then warned investors in Sirius XM Holdings Inc. “to pay close attention to the stock” based on recent moves in the options market.


Now, it’s wondering why Meredith Corp. shares as of Tuesday’s Closing Bell on Wall Street have lost some 16.5% of their value since the company’s last quarterly earnings report.

On May 17, Meredith stock didn’t look so hot.

Shares were at $51.88, off from $57.75 on May 2 and $65.35 on April 25, the turning point for Meredith.

Yet, shares have started to rebound. And, today’s trading shows that Zacks report may have been a bit premature.

At 3:45pm Eastern on Wednesday (5/31), MDP shares were up 25 cents to $54.20.

Still, with volume lower than average, it’s worth reviewing Zacks queries regarding Meredith, which owns broadcast TV stations across the U.S. in addition to its wide assort of female-targeted lifestyle brands.

For Meredith’s Local Media Group, fiscal Q3 2017 saw total revenue improve to $142 million, from $140.9 million in the year-ago period. This was driven by retransmission fee revenue, which offset an expected dip in political ad revenue ($1.68 million in Q3 2017, compared to $5.6 million in Q3 2016).

But, Local Media Group Q3 profit was down to $41.2 million, from $46.2 million, as EBITDA for Local Media in Q3 ’17 dipped to $49.6 million, from $55.5 million.

Meredith posted fiscal Q3 2017 adjusted earnings of 87 cents per share that met the Zacks Consensus Estimate but declined 5.4% from the prior-year quarter.

“We note that the company reported in-line earnings after registering 13 straight quarters of positive earnings surprise,” it said.

But, management reiterated its earnings per share guidance for fiscal 2017. The company continues to expect adjusted earnings in the band of $3.85-$3.90 per share. For the fourth quarter earnings are anticipated to be in the range of $0.93-$0.98 per share. Including special items, Meredith envisions fiscal 2017 earnings between $4.13 and $4.18 per share.

How have Meredith’s estimates been moving since the April 27 release of its fiscal Q3 results, which clearly negatively impacted MDP shares?

“Analysts were quiet during the last one-month period, as none of them issued any earnings estimate revisions,” Zacks notes.

On the topic of VGM Scores, at this time Meredith’s stock “has a nice Growth Score of ‘B’, though it is lagging a lot on the momentum front with a ‘D’,” Zacks says.

The stock was allocated a grade of ‘B’ on the value side, putting it in the top 40% for this investment strategy, it adds.

“Overall, the stock has an aggregate VGM Score of ‘B’,” Zacks says. “If you aren’t focused on one strategy, this score is the one you should be interested in.”

So, what’s Zacks outlook?

Buy Meredith shares.

The stock has a Zacks Rank #2 (Buy).

“We expect an above average return from the stock in the next few months,” Zacks concludes.