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Nielsen (NLSN) Earnings & Revenues Beat Estimates in Q3

Zacks Equity Research

Nielsen Holdings plc NLSN reported third-quarter 2019 adjusted net earnings of 51 cents per share, beating the Zacks Consensus Estimate of 42 cents. Also, the figure was up 13.3% 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 $1.616 billion, increasing 1% year over year. Also, the reported revenues increased 2.4% on a constant-currency basis. The top line marginally surpassed the Zacks Consensus Estimate of $1.60 billion.

As part of the ongoing strategic review plan, the company has decided to separate Global Media and Global Connect businesses into two independent, publicly-traded companies - the Global Media business and the Global Connect business.

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

Top-Line Details

Global Media revenues during the third quarter were $870 million (accounting for 54% of its total revenues), reflecting an increase of 3.9% from the year-ago level or 4.6% on a constant-currency basis. Audience Measurement revenues also increased 4.2% 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 3.3% year over year or 4.2% on a constant-currency basis, driven by growth at Gracenote, partially offset by pressure in Telecom.

Global Connect revenues during the quarter were $746million (46% of total revenues), reflecting a 2.2% decrease from the year-ago period.The figure was flat on a constant-currency basis.

Revenues in Measure decreased 2.8% year over year. Excluding foreign currency impact, revenues decreased 0.4% from the prior-year quarter, reflecting declines in developed markets, partially offset by strong retail measurement services and improved trends in emerging markets.Also, Predict/Activate revenues decreased 0.9% from the year-ago quarter but increased 0.9% on a constant-currency basis.

Operating Results

Gross margin was 57.1%, down 30 basis points (bps) from the year-ago period.

Nielsen’s operating expenses — namely selling, general and administrative — were $467 million, increasing 0.6% from the year-ago figure.

Adjusted EBITDA was $476 million in the third quarter, increasing 1.1% from the prior-year level. Also, adjusted EBITDA margin expanded 2 bps to 29.5%, as productivity initiatives were offset by investments in growth initiatives.

Balance Sheet & Cash Flow

Nielsen exited the quarter with a cash balance of approximately $389 million compared with $393 million in the second quarter.

Gross debt in the third quarter was $8.49 billion. Net debt (gross debt excluding cash and cash equivalents) was $8.1 billion, and net debt leverage ratio was 4.38 at the end of the quarter.

Cash flow from operations was $413 million, capex totaled $112 million and free cash flow amounted to $301 million in the third quarter.

Guidance

Management reiterated its full-year 2019 guidance for revenues,adjusted EBITDA and free cash flow but upwardly revised itsview for adjusted earnings per share.

The company expects total revenues to be approximately $6.4 billion on a constant-currency basis, adjusted EBITDA margin of 28-29% and adjusted EBITDA within $1,800-$1,900 million. Nielsen expects free cash flow in the range of $525-$575 million.

It now expects adjusted earnings per share in the range of $1.77-$1.83 versus $1.70-1.80 projected earlier.

Zacks Rank and Stocks to Consider

Nielsen currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Stamps.com Inc. STMP, AMETEK, Inc. AME and Carvana Co. CVNA. While Stamps.com sports a Zacks Rank #1 (Strong Buy), AMETEK and Carvana carry 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 Stamps.com, AMETEKand Carvana is currently projected at 15%, 10.91% and 9%, respectively.

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