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Nielsen Holdings Plc (NLSN) Up 53.3% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Nielsen Holdings Plc (NLSN). Shares have added about 53.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nielsen Holdings Plc due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Nielsen's Q4 Earnings Beat Estimates

Nielsen has reported fourth-quarter 2021 adjusted earnings of 46 cents per share, which beat the Zacks Consensus Estimate by 27.8% and grew 43.8% year over year.

Total revenues were $894 million, which increased 2.5% on a reported basis and 2.9% on a constant-currency basis from the year-ago quarter. Further, it rose 4.7% from the year-ago quarter on an organic constant-currency basis.

However, the figure missed the consensus mark of $896.3 million.

Year-over-year revenue growth was driven by solid momentum across the company’s Measurement Solutions.

However, the sluggish performances of Impact Marketing and Gracenote Content Solutions remained concerning.

Notably, Nielsen renamed its product categories — Audience Measurement and Outcomes/ Content as Measurement Solutions and Impact/Content (Impact Marketing Solutions/Gracenote Content Solutions), respectively.

Top-Line Detail

In the fourth quarter, Measurement Solutions’ revenues rose 3.7% year over year to $647 million (72.4% of total revenues). This was primarily attributed to the strength across national and digital measurement products. Also, solid momentum across local products contributed well.

Impact/Content revenues decreased 0.4% year over year to $247 million (27.6% of the total revenues) due to a timing-related decline in Content. Nevertheless, Impact revenues grew 3.4% from the prior-year quarter on an organic constant-currency basis, driven by the improving Sports business and robust growing short-cycle revenues.

Operating Details

Adjusted EBITDA decreased 7.6% year over year to $351 million. The adjusted EBITDA margin contracted 432 basis points (bps) to 39.3% in the reported quarter.

Nielsen’s selling, general and administrative expenses were $249 million, increasing 44.8% year over year. As a percentage of revenues, the figure expanded 810 bps to 27.8%

The operating income was $178 million, which grew 10.6% year over year. As a percentage of revenues, the figure expanded 140 bps year over year to 19.9%.

Balance Sheet & Cash Flow

As of Dec 31, 2021, the cash and cash equivalent balance was $380 million, down from $542 million as of Sep 30, 2021.

At the end of the reported quarter, gross debt and net debt (gross debt minus cash and cash equivalents) were $5.6 billion and $5.2 billion, respectively. Notably, gross debt and net debt were $5.8 billion and $5.3 billion at the end of the previous quarter, respectively.

The company generated $227 million of cash from operations compared with $271 million in the previous quarter.

Its free cash flow was $133 million in the fourth quarter.

2022 Guidance

For 2022, the company expects revenue growth of 3.5-4.5% on a constant-currency basis. Organic revenue growth is anticipated between 4% and 5%.

The company expects adjusted earnings between $1.81 and $1.91 per share.

The adjusted EBITDA margin is expected to be 42.6-42.9%.

Free cash flow is expected between $650 million and $700 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Nielsen Holdings Plc has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Nielsen Holdings Plc has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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