Five Book Publishing Stocks: Not Dead Yet
Online retailer Amazon.com (NASDAQ: AMZN) said earlier this month it now sells more digital e-books than paper books. And the consensus at this past week's BookExpo America was that the book publishing industry is losing money overall, even while sales of e-books and e-readers are on the rise.
According to the Association of American Publishers, e-book sales increased in the first quarter of 2011 more than 150% to $233.1 million. During the same period, print books saw a decline of about 23% from the previous year.
So that is it for the book publishers, right? Maybe not. Here is a peek at where things stand for the following five publicly traded U.S. book publishing companies.
Courier (NASDASQ: CRRC): Known primarily as one of the nation's largest book printers, Courier also publishes home and garden books, fiction and education materials. Courier reported a revenue increase in the most recent quarterly report, but earnings fell due to a plant closing and the closure of some Borders book stores. Courier has a nice dividend yield of 7.7%, but last week, the share price slipped to a 52-week low of $11 after falling about 22% in the past three months. The stock is at its lowest point since March of 2009. Not surprisingly, it has underperformed the industry average since the beginning of the year.
John Wiley & Sons (NYSE: JW-A): For Dummies, Frommer's and CliffsNotes are just a few of the lines from Wiley, a publisher of reference works, textbooks and journals. The company's earnings per share and revenue were better than expected in the most recent quarterly report, due in part to higher revenue from digital products. "Customer purchasing patterns continue to shift," CEO Will Pesce said. "Wiley is well-positioned to capitalize on this shift as a result of our publishing strategy." The dividend yield is 1.2% and the return on equity is 21.2%. Shares are trading near the 52-week high of $53 after climbing more than 23% in the past six months. The stock's performance has been in line with the book publishing industry average in that time.
McGraw-Hill (NYSE: MHP): One of the world's largest producers of textbooks and other educational materials, its Standard & Poor's (S&P) unit provides indexes and credit ratings as well. Earlier this month, the company launched its McGraw-Hill eBook Library, offering more than 1,000 titles to institutions around the world. McGraw-Hill also said in April it would accelerate its share buyback program. The company has a dividend yield of 2.2% and its return on equity is 40.7%. The share price is still in the neighborhood of the recent 52-week high of $43.50. So of course the stock has outperformed the broader markets and also the book publishing industry average since the beginning of the year.
Pearson (NYSE: PSO): London-based Pearson is a leading publisher of textbooks, as well as fiction and nonfiction through its Penguin Group and the Financial Times newspaper. In an interview earlier this year, CEO Marjorie Scardino attributed Pearson's strong performance to its digital and emerging market strategies. CFO Robin Freestone said the company would seek to use its strong cash position to continue to provide organic investment, make acquisitions and increase the dividend. The share price has pulled back about 4% from a recent 52-week high of $19.40. The stock has outperformed the broader markets year-to-date but has been in line with the book publishing industry average.
Scholastic (NASDASQ: SCHL): New York-based Scholastic was the U.S. publisher of the phenomenally successful Harry Potter series. The leading children's book publisher posted a larger-than-expected net loss in the most recent quarter as schools struggle with reduced budgets and Scholastic accelerated spending on digital initiatives. CEO Richard Robinson said, "We are maintaining our outlook for free cash flow, based on a strong balance sheet and tight working capital management." The dividend yield is 1.2%. Shares have traded mostly between $26 and $27 since late March; the 52-week high is $32 per share. The stock has underperformed the broader markets since the beginning of the year.
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