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Nielsen (NLSN) Earnings & Revenues Beat Estimates in Q2

Zacks Equity Research

Nielsen Holdings plc NLSN reported second-quarter 2019 adjusted net earnings of 53 cents per share, beating the Zacks Consensus Estimate of 41 cents. Also, the figure was up 12.8% from the year-ago quarter.

The increase in earnings was driven by higher operating profit and a lower effective tax rate.

Total revenues came in at $1.628 billion, decreasing 1.2% year over year. However, the reported revenues increased 1.2% on a constant-currency basis and marginally surpassed the Zacks Consensus Estimate of $1.621 billion.

Top-Line Details

Global Media revenues during the second quarter were $856 million (accounting for 53% of its total revenues), reflecting an increase of 1.1% from the year-ago level or 2% on a constant-currency basis. Audience Measurement revenues increased 3.5% from the prior-year quarter, driven by continued client adoption of its Total Audience Measurement system, partly offset by pressure in local television measurement.

However, Plan/Optimize revenues decreased 4.9% year over year or 3.3% on a constant-currency basis, owing to weakness in Telecom.

Global Connect revenues during the quarter were $772 million (47% of total revenues), reflecting a decrease of 3.5% from the year-ago period but an increase of 0.4% on a constant-currency basis.

Revenues in Measure decreased 2.5% year over year. Excluding foreign currency impact, revenues increased 1.7% from the prior-year quarter, reflecting strong retail measurement services and improved trends in emerging markets. However, Predict/Activate revenues decreased 5.8% from the year-ago quarter or 2.6% on a constant-currency basis. The decrease was due to continued softness in areas such as custom analytics.

Nielsen Holdings Plc Price, Consensus and EPS Surprise

 

Nielsen Holdings Plc Price, Consensus and EPS Surprise

Nielsen Holdings Plc price-consensus-eps-surprise-chart | Nielsen Holdings Plc Quote

Operating Results

Gross margin was 57.1%, down 50 basis points (bps) from the year-ago period.

Nielsen’s operating expenses, namely selling, general and administrative, were $483 million, decreasing 2.2% from the year-ago figure.

Adjusted EBITDA was $470 million in the second quarter, increasing 0.4% from the prior-year level. Also, adjusted EBITDA margin expanded 45 bps to 28.9% as productivity initiatives were offset by investments in growth initiatives.

Balance Sheet & Cash Flow

Nielsen exited the quarter with a cash balance of approximately $393 million compared with $530 million in the first quarter.

Net debt (gross debt excluding cash and cash equivalents) was $8.25 billion, and net debt leverage ratio was 4.48 at the end of the quarter.

Cash flow from operations was $226 million, capex totaled $108 million and free cash flow amounted to $118 million in the second quarter.

Guidance

Management reiterated its full-year 2019guidance for revenues but increased the same for adjusted earnings per share. It expects total revenues to be approximately $6.4 billion on a constant-currency basis. Adjusted earnings per share are now expected in the range of $1.70-1.80 versus $1.63-1.77 projected earlier.

The company expects free cash flow in the range of $525-$575 million.

Zacks Rank and Stocks to Consider

Currently, Nielsen carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alibaba Group Holding Limited BABA, Teradyne, Inc. TER and eBay Inc. EBAY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Alibaba, Teradyne and eBay is currently projected at 26.8%, 11.4% and 9.4%, respectively.

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