Stock to watch: JOHN WILEY & SONS -CL A Common Stock (NYSE: JW.A)

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JOHN WILEY & SONS -CL A Common Stock (NYSE: JW.A) stock rose over 1.9% on June 12th, 2018 (as of 12:09 PM GMT-4; Source: Google finance) after the company posted better than expected results for the fourth quarter 2018, due to the revenue growth in its research and solutions businesses.

JW.A in the fourth quarter of FY 18 has reported the adjusted earnings per share of 94 cents, beating the analysts’ estimates for the adjusted earnings per share of 76 cents. The company had reported the adjusted revenue growth of 5.6 percent to $477.3 million in the fourth quarter of FY 18. The company attributed the overall revenue growth due to a 10.2% jump in revenue in its research business and a 5.9% rise in its solutions business. A 1.7% decline in publishing revenue offset those gains.

Moreover, in the fourth quarter 2018, Research growth was driven due to Open Access (+59% reported, +51% constant currency) and Journal Subscriptions (+7% reported, +2% constant currency). Publishing performance showed a decline in STM and Professional Publishing (-5% reported, -10% constant currency), which more than offset growth in Educational Publishing (+5% reported, +2% constant currency) and Course Workflow/WileyPLUS (+13% reported, +12% constant currency). Further, Solutions businesses all exhibited growth with increases in Education Services (+1% reported and constant currency), Professional Assessment (+5% reported, +4% constant currency), and Corporate Learning (+15% reported, +2% at constant currency).

Additionally, Cash Provided by Operating Activities has increased 19% to $374 million due to earnings performance and working capital improvements. Free Cash Flow less Product Development Spending growth (+35%) was primarily attributable to the increase in Cash Provided by Operating Activities. Capital expenditures, including Technology, Property, and Equipment and Product development spending, rose $1 million to $150 million.

In addition, Wiley  utilized $74 million of cash for dividends and $40 million for share repurchases with an average per share cost of $55.65. In the prior year, the company had utilized $72 million and $50 million for dividends and share repurchases, respectively.

In FY19, the company is expecting revenue to be even with FY 18, and it is expecting a mid-single-digit decline in its earnings per share because of increased investments in revenue growth initiatives, particularly in Research and Education Services. Further, the company expects low-single digit Revenue growth in Research and Solutions offset by a low-single digit Revenue decline in Publishing. In FY 19, Capital Expenditures are expected to decline modestly with the completion of the company’s headquarters transformation. The increased investment is expected in areas of product development and business optimization.

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