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Madison Square (MSG) Q2 Earnings & Revenues Beat Estimates

Zacks Equity Research

The Madison Square Garden Company MSG reported better-than-expected results in the second quarter of fiscal 2019. While the bottom line surpassed the Zacks Consensus Estimate for the second straight quarter, the top line outpaced the same for the ten successive quarters.

In the quarter under review, Madison Square’s earnings of $3.42 per share exceeded the consensus estimate $2.09. In the prior-year quarter, the company reported earnings of $7.96 per share. Net revenues came in at $632.2 million, which trumped the consensus mark of $593 million and improved18% year over year.

Following the results, shares of the company witnessed a marginal gain of 0.4% on Feb 1. In a year’s time, the stock has gained 26.3% against the industry’s 8.5% decline.

Segmental Performance

Madison Square operates under two segments — MSG Sports and MSG Entertainment.

Revenues from the Madison Square’s Entertainment segment totaled $316.5 million, up 17% year over year. The upside can be attributed to higher overall event-related revenues at the company's venues and surge in revenues for the Christmas Spectacular Starring the Radio City Rockettes production. Increase in sponsorship and signage, and suite license fee revenues also provided a boost to revenue growth.

The segment’s adjusted operating income came in at $101 million, up 23% from the prior-year quarter. The metric was primarily driven by a sharp rise in revenues, which partially overshadowed increase in direct operating expenses and higher selling, general and administrative expenses.

The Madison Square Garden Company Price, Consensus and EPS Surprise

The Madison Square Garden Company Price, Consensus and EPS Surprise | The Madison Square Garden Company Quote

Revenues from the Sports segment rose 19% to $315.8 million. Increase in local media rights fees from MSG Networks and higher revenues from league distribution, suite license fee revenues, professional sports teams’ ticket-related revenues as well as sponsorship and signage revenues led to the uptick.

The segment recorded adjusted operating income of $48.6 million, down 13% from the year-ago quarter. The decline reflects higher selling, general and administrative expenses, and direct operating expenses, which overshadowed increase in revenues.

Operating Income

In the reported quarter, Madison Square reported adjusted operating income of $130.4 million, up 10% year over year.

Balance Sheet

Cash and cash equivalents totaled $1.22 billion as of Dec 31, 2018, almost flat year over year. The company ended the reported quarter with long-term debt of $100.4 million compared with $101.3 million at the end of fiscal 2018.

Madison Square has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

Other favorably-ranked stocks in the same space include Planet Fitness, Inc. PLNT, Royal Caribbean Cruises Ltd. RCL and Cinemark Holdings, Inc. CNK. All these stocks have the same rank as Madison Square.

Planet Fitness reported better-than-expected earnings in the trailing four quarters, with the average being 8.6%.

Royal Caribbean Cruises and Cinemark Holdings’ long-term earnings is expected to grow by 14% and 15%, respectively.

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