For Immediate Release
Chicago, IL – May 12, 2014– Zacks Equity Research highlights US Ecology (ECOL-Free Report) as the Bull of the Day and Madison Square Garden Company (MSG-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Time Warner Inc. (TWX-Free Report), Time Warner Cable Inc. (TWC-Free Report) and Meredith Corp. (MDP-Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
2014 has been very rough for a number of small and mid cap securities as bubble fears have plagued the space. In fact, the Russell 2000 is down close to 4.5% so far in 2014, including a roughly 5.4% loss in the last month alone.
However, while many small cap stocks have floundered in this environment, a few have been able to fight through the pessimism and prosper. A great example of this is the often-overlooked US Ecology (ECOL-Free Report), a stock which has soared by over 25% so far in 2014.
US Ecology is a Boise, Idaho based company that provides waste treatment, disposal, and recycling services, mostly in the Western United States, though it has branched out to Canada, Texas, and Michigan as well. The firm specializes in a variety of waste services including hazardous, industrial, and radioactive management.
As you might guess, this is a relatively ‘wide moat’ business that can be difficult to break into for many firms. This has allowed ECOL to prosper in a variety of market conditions, and makes it an interesting (and seemingly less risky) way for investors to tap into the small cap space.
Bear of the Day:
For sports fans, the Madison Square Garden Company (MSG-Free Report) really shouldn’t need an introduction. The company was spun-off from Cablevision in 2010 and owns the NBA’s New York Knicks, the NHL’s New York Rangers, Madison Square Garden itself, and the MSG Network, among a variety of other entertainment assets.
Since the spin-off, the stock price has soared as a great deal of value was apparently unlocked as a stand-alone company. In fact, MSG has actually added more than 150% since its debut in 2010, easily crushing not only the S&P 500 index, but also its former parent company as well.
Yet while the stock has had a good run, turbulence has hit MSG lately, and particularly so after its recent earnings report. This most recent report actually marked the first time that MSG had missed estimates in more than two years, and given the size of the miss, it could suggest some more troubles are ahead for this company.
In the most recent report, MSG was expected to earn 39 cents a share for the quarter. However, the company put up just 24 cents a share in earnings, a negative surprise of nearly 38.5%. This quarter may also be a bit unfavorable when compared to last year, thanks to some disappointing results from some of MSG’s assets (teams).
Time Warner Finalizes Spinoff Details
In order to cushion itself from bearing the brunt of print advertising, Time Warner Inc. (TWX-Free Report) had decided to spin-off subsidiary Time Inc. in 2013. Yesterday, this Zacks Rank #3 (Hold) media giant unveiled further details of the divestiture, including an announcement of a spin-off dividend.
The company intends to pay dividends on the shares of Time Inc. on Jun 6, 2014, when the spin-off closes officially. The dividend payment will be made on a pro rata basis, previously approved by the parent company’s board.
On the day of distribution, Time Warner’s stockholders of record as of May 23, 2014 will receive a share of Time Inc. each for every 8 shares of the parent company. However, fractional shares of the ex-subsidiary will be consolidated and sold through open market operations with the cash proceeds given to Time Warner shareholders on a pro-rata basis, instead of distributing fractional shares directly.
This strategy of special dividend payment is not uncommon if we closely review Time Warner’s past spin-offs. In 2009, Time Warner Cable Inc. (TWC-Free Report), after being spun off from Time Warner, had also paid a special dividend.
Following the wind off, Time Warner will continue to trade under the ticker “TWX” on New York Stock Exchange (:NYSE) in the “regular way.” However, Time Inc. will trade on a “when-issued” basis under the ticker name “TIME.WI” from May 21, after which it will trade the “regular way” under the symbol “TIME” from Jun 9, which will mark the end of the “when-issued” trading.
The company first announced its plan to spin-off Time Inc. in Mar 2013 which followed the negotiation between Time Warner and Meredith Corp. (MDP-Free Report) to create a magazine-based company, which, however, failed to materialize.
Management believes that the decision to offload Time Inc., which includes brands such as People, Sports Illustrated, InStyle, Time, Real Simple and Fortune, would augur well for Time Warner, as this would facilitate the latter to concentrate purely on television networks and film and TV production businesses.
Time Inc.’s magazines boast over 130 million readers nationwide per month, and its websites witness traffic of approximately 50 million every month.
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