Picture Source: Sportsblog.com
- Fiscal 2017 second quarter revenues of $175.6 million, up 3% versus the prior year quarter
- Fiscal 2017 second quarter operating income of $79.8 million, up 9% versus the prior year quarter
- Fiscal 2017 second quarter adjusted operating income of $85.7 million, up 9% versus the prior year quarter
Source: Company Reports
- Revenue was $184 in F2Q17A by my model estimate, thus MSG missed my top-line forecast and was in line to the street this quarter.
- Y/Y the top line is up about 3% to $175.6 million versus $169.9 million in the prior year.
- Operating income $79.8 million compares to my model, $77.3 million which is a nice beat owing to higher affiliate fees. Our model is weighted to advertising growth.
- EPS missed $057 per share in F2Q17A as compared to my model $0.58 as taxes and the share count offset the operating income beat.
- MSGN’s earnings quality is very good and AOI posted at $86 million in F2Q17A which compares to $81.5 million by my model. As the operating beat did translated into robust cash like income generation after non cash expenses.
Conclusion:
MSGN shares have had a hell of a run from my upgrade at a former firm and from the $14.73 52 week low.
I expect about a 3% to 5% profit taking selloff in MSGN shares following the results however, as MSGN trades at roughly 10x trailing EPS and MSGN deserves a 12x to 14x premium multiple I still think this stock has +20% to the $28 range +/- $1.
Key here is MSG GO is now a complete package after getting rights to stream NHL hockey games. I think MSG GO provides MSGN leverage in seeking higher affiliate fees and additional OTT opportunities.
Thanks for reading
Rich Tullo
Ten X Research 