John Wiley & Sons, Inc. JW.A is focused on boosting investors’ sentiments through several growth initiatives and shareholder-friendly moves. To this end, the company announced a 3% hike in its quarterly dividend, taking it from 33 cents a share to 34 cents. This is payable on Jul 24, 2019 to shareholders of record as on Jul 10.
John Wiley has been committed toward enhancing shareholders’ returns. In fiscal 2019, it returned $76 million in cash to its shareholders through dividend payments and $60 million through buyback.
We appreciate John Wiley’s efforts to consistently enhance long-term shareholder value. Markedly, dividend hikes not only enhance shareholder returns but also raise the market value of the stock. Through this strategy, companies try to win investors and persuade them to either buy or hold the scrip instead of selling it.
Apart from dividend hikes, John Wiley also concentrates on other efficient capital allocation strategies, like prudent acquisitions and investment in organic growth.
Talking of acquisitions, the company has acquired several publishing and distribution companies along with various online service providers. In this regard, it took over Knewton in May 2019, which strengthens its position in the adaptive learnings and affordable content category. It acquired The Learning House, an education services provider, in November 2018. This has helped the company strengthen its position in the fast-growing education services market.
Notably, the company is progressing well with its multi-year business optimization program, which is generating solid savings and enhancing its efficiency. Markedly, management anticipates savings for the three-year period to be nearly $100 million.
Is the Picture Dull for John Wiley?
Unfortunately, this Zacks Rank #5 (Strong Sell) company has been witnessing decline in revenues at its Publishing segment for quite some time now. During the fourth quarter, sales dropped 1% at cc due to dismal performance by Educational Publishing, STM and Professional Publishing. Management anticipates revenues from its newly-aligned Education and Professional Publishing segment to be $690-$700 million for fiscal 2020 compared with $705 million in fiscal 2019.
Also, the company continued to incur increased investment costs in the fourth quarter of fiscal 2019. Evidently, adjusted contribution to profit (“CTP”) from the Solutions segment declined 25% at cc, owing to the buyout of Learnings House and high marketing expenses to support future enrollment growth.
The company expects adjusted earnings of $2.45-$2.55 for fiscal 2020, down from $2.96 reported in fiscal 2019. The decline is attributable to certain costs related to buyouts, and elevated investments for growth and optimization of Research and Education Services businesses. Adjusted EBITDA is also likely to decline to $360-$375 million in fiscal 2020, down from $388 million in fiscal 2019.
In the past year, shares of this Hoboken, NJ-based company have lost approximately 27% compared with the industry’s decline of 26.8%.
The New York Times Company NYT delivered average positive earnings surprise of 29.4% in the trailing four quarters and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thomson Reuters Corporation TRI has a long-term earnings growth rate of 8% and a Zacks Rank #2 (Buy).
L Brands, Inc. LB has a long-term earnings growth rate of 11% and a Zacks Rank #2.
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