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Madison Square Garden Posts Best Profit in its Public History

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Madison Square Garden Company (NASDAQ: MSG) has delivered its most profitable quarter in its two year history as a public company. The company operates entertainment venues, cable channels and sports teams in its three business units. MSG reported $0.40 per diluted share in net income, which outperformed last year by 63%, and was well up on estimates averaging $0.18 cents.

The company had $400.5 million in revenues, which was a 21 percent increase from the prior year's quarter. Estimates for revenues among analysts had averaged $352 million. Ajusted operating cash flows (AOCF) of $80.2 million represented an even higher increase of 46 percent over the same quarter of last year, which the company said was primarily driven by an increase of adjusted cash flow in its MSG Sports segment. Operating income, at $53.3 million, was up 75 percent.

Notable action on the company's numbers across its units included a 13% increase in revenues in the Media unit. A pricing dispute resolution with Time Warner Cable (NYSE: TWC), which was helped along by Jeremy Lin-fueled demand for Knicks coverage, helped matters on that. NBA work stoppage did hurt revenues at the Entertainment diision, which were down 20 percent. Higher prices for tickets and events, however, led to higher revenues in the Sports division.

At the present, consensus among analysts following the company is that mainly positive, with half rating it a Buy or equivalent. Of the remainder, 20 percent is rated Sell or equivalent, with the rest at Neutral. Shares are sitting just over the median in price target consensus of 36.50.

Shares have appreciated 26.5 percent in 2012, having gained 3.5 percent just today on the heels of the earnings report. Following today's action, we may look at a new round of rating revisions, which may see some Hold-raters crossing over to Buy. However, should Linsanity prove a fleeting catalyst, we may see analysts transition into a Hold pattern as they make their mind where to go from here.

Trading volume in the market is relatively quiet, at under half a million shares per day, which suggests price is driven down by a handful of bullish investors. Where it goes from there once a wider crowd weighs in is not certain. Near-term profit taking is something to consider.

MSG closed at $34.34 yesterday.

Posted-In: Analyst Color Earnings Long Ideas News Short Ideas Upgrades Downgrades Movers & Shakers Best of Benzinga

 

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