This company, which is primarily a publisher of scientific, technical, medical, and scholarly journals and a provider of related content and services, has been grouped into research journals publisher sector in book industry.
It seems that the demand for print education and materials of companies in this sector has been continuingly decreasing in the past several years as indicated by the averaged decrease in organic print revenue (average 4-7% annually in 2016-2018). Demand for print journals has largely decreased as indicated by the decrease in subscription for print journals and companies keep to move their focus to digital journals and subscription, which seems still not to be able to offset decrease in print subscription. Revenue/demand for digital content related service has grown and contributed most of organic growth during this period of time.
The typical company in this sector has typical 73% gross margin in 2018 with about 60% SG&A as percentage of sales.
It seems that the demand for print materials of this company has been very weak and declined in the past several years (4-7% decline annually) and the decline seems to be accelerating recently. The demand for journals subscription/ access has been stable but presents no strong growth as well in the past several years.
The first nine months of fiscal 2018 compared with the same period of 2017
Organic journals revenue increased about 2% due to increase in open access offset by decrease in subscriptions.
Organic publishing revenue decreased about 4% due to decrease in print book revenues.
The fiscal 2017 compared with 2016
Organic journals revenue decreased about 1%.
Organic publishing revenue decreased about 7% due to decrease in print book and reference materials.
Fiscal 2016 compared with fiscal 2015
Organic journals revenue decreased about 1%.
Organic publishing revenue decreased about 4% due to decrease in print book revenues.
Its gross margin has been around at 73% since 2015. And with the slightly fluctuated SG&A as percentage of sales (to around 59%), its operating margin went down by a little to 14% in 2018.
Stock performance
This stock had a stock price/cash flow ratio of 25. We think that its stock is being relatively fairly valued considering its effort in shifting its focus on digital products but its large capital expenditure.
