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Nielsen Holdings plc reported adjusted second-quarter 2016 earnings of 71 cents per share, above the Zacks Consensus Estimate of 69 cents.
Revenues
Reported revenues came at $1.60 billion, up 2.4% year over year on the back of solid performance by the company’sBuy and Watch businesses. However, revenues were slightly below the Zacks Consensus Estimate of $1.609 billion.
On a constant currency basis, revenues increased 4.5%.
Revenues by Segment
Buy business revenues were $852 million (53% of total revenue), flat year over year but up 3.3% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed and Emerging markets grew 0.9% and 8.9%, respectively.
Watch business revenues were $744 million (47%), up 5.2% year over year or 5.8% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and marketing effectiveness, which improved 7.9% and 15.1%, respectively, on a constant currency basis.
Operating Results
Reported gross margin was 59.0%, down 60 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of $474 million, increased 1.9% from the year-ago figure of $465 million. As a result, operating margin decreased 60 bps year over year to 17.7%.
Net Income
On a GAAP basis, Nielsen recorded net profit of $114 million or 31 cents per share compared with $116 million or 31 cents in the year-ago quarter.
On an adjusted basis, net profit per share came in at 71 cents compared with 66 cents a year ago.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $346 million against $432 million last quarter. Gross debt was $8.008 billion, higher than$7.660 billion at the end of first-quarter 2016.
Net debt (gross debt excluding cash and cash equivalents) was $7.662 billion and net debt leverage ratio was 4.03x at the end of the quarter.
Cash flow from operations was $210 million in the second quarter versus $87 million in the prior quarter and $253 million in the year-ago quarter. Free cash flow was $98 million in the second quarter versus $14 million in the prior quarter and $156 million in the year-ago quarter.
Share Repurchases
Nielsen repurchased $221 million of its stock during the second quarter. The company has a total of $551 million remaining under the existing repurchase program, which it expects to utilize by the end of 2017.
Nielsen Holdings is an information and measurement company which offers media and marketing information on what consumers watch and buy both locally and locally. The company reported decent second-quarter results, with the bottom line beating the Zacks Consensus Estimate andthe top line missing the same.
Continued dividend payment and share repurchase reflect Nielsen’s financial strength and commitment to return value to shareholders. Also, the company's product launches are progressing well and should drive revenues in the near term.
However, continued investments in technology and infrastructure could weigh on margins and profitability, going forward.
Currently, Nielsen carriesa Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Silicon Motion Technology Corp. (SIMO - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and FormFactor Inc. (FORM - Free Report) and Amkor Technology, Inc. (AMKR - Free Report) carrying a Zacks Rank #2 (Buy).
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Nielsen (NLSN) Beats Q2 Earnings Estimates, Lags Revenues
Nielsen Holdings plc reported adjusted second-quarter 2016 earnings of 71 cents per share, above the Zacks Consensus Estimate of 69 cents.
Revenues
Reported revenues came at $1.60 billion, up 2.4% year over year on the back of solid performance by the company’sBuy and Watch businesses. However, revenues were slightly below the Zacks Consensus Estimate of $1.609 billion.
On a constant currency basis, revenues increased 4.5%.
Revenues by Segment
Buy business revenues were $852 million (53% of total revenue), flat year over year but up 3.3% on a constant currency basis. Excluding the foreign currency impact, revenues in the Developed and Emerging markets grew 0.9% and 8.9%, respectively.
Watch business revenues were $744 million (47%), up 5.2% year over year or 5.8% on a constant currency basis. The increase came on the back of continued strength in Audience Measurement and marketing effectiveness, which improved 7.9% and 15.1%, respectively, on a constant currency basis.
Operating Results
Reported gross margin was 59.0%, down 60 basis points (bps) from the year-ago period.
Nielsen’s operating expenses, namely selling, general and administrative expenses of $474 million, increased 1.9% from the year-ago figure of $465 million. As a result, operating margin decreased 60 bps year over year to 17.7%.
Net Income
On a GAAP basis, Nielsen recorded net profit of $114 million or 31 cents per share compared with $116 million or 31 cents in the year-ago quarter.
On an adjusted basis, net profit per share came in at 71 cents compared with 66 cents a year ago.
Balance Sheet & Cash Flow
Nielsen exited the quarter with a cash balance of approximately $346 million against $432 million last quarter. Gross debt was $8.008 billion, higher than$7.660 billion at the end of first-quarter 2016.
Net debt (gross debt excluding cash and cash equivalents) was $7.662 billion and net debt leverage ratio was 4.03x at the end of the quarter.
Cash flow from operations was $210 million in the second quarter versus $87 million in the prior quarter and $253 million in the year-ago quarter. Free cash flow was $98 million in the second quarter versus $14 million in the prior quarter and $156 million in the year-ago quarter.
Share Repurchases
Nielsen repurchased $221 million of its stock during the second quarter. The company has a total of $551 million remaining under the existing repurchase program, which it expects to utilize by the end of 2017.
NIELSEN HOLDNGS Price, Consensus and EPS Surprise
NIELSEN HOLDNGS Price, Consensus and EPS Surprise | NIELSEN HOLDNGS Quote
Our Take
Nielsen Holdings is an information and measurement company which offers media and marketing information on what consumers watch and buy both locally and locally. The company reported decent second-quarter results, with the bottom line beating the Zacks Consensus Estimate andthe top line missing the same.
Continued dividend payment and share repurchase reflect Nielsen’s financial strength and commitment to return value to shareholders. Also, the company's product launches are progressing well and should drive revenues in the near term.
However, continued investments in technology and infrastructure could weigh on margins and profitability, going forward.
Currently, Nielsen carriesa Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Silicon Motion Technology Corp. (SIMO - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and FormFactor Inc. (FORM - Free Report) and Amkor Technology, Inc. (AMKR - Free Report) carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>