JW.A - Embedded Expectations Analysis - 2021 04 27
John Wiley & Sons, Inc. (JW.A:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 20.3x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management appears to have concerns about securing corporate clients, revenue growth, and the potential of their Hindawi acquisitionSpecifically, management may lack confidence in their ability to maintain Digital courseware activations growth, further secure new large corporate clients, and capitalize on Hindawi's fast-growing portfolio of over 200 Open Access journals. Moreover, they may have concerns about the overall potential of their Hindawi acquisition, the sustainability of demand for career discipline training, and their recent strategic partnership with the Chinese Medical Association publishing house. Furthermore, management may lack confidence in their ability to continue investing in market-driven growth opportunities, maintain strong business performance and momentum, and sustain their EBITDA margins. Finally, they may be concerned about the impact of their professional learning business transition to virtual alternatives, and they may lack confidence in their ability to publish more article submissions and sustain cost savings post-pandemic
John Wiley & Sons is a global research and learning company. Co. has three segments: Research segment, which provides scientific, technical, medical, and scholarly journals, as well as related content and services to libraries and individual researchers, among others; Publishing, which provides scientific, professional, and education books and related content in print and digital formats, test preparation services and course workflow tools, to libraries, corporations, students, professionals, and researchers; and Solutions, which provides online program management services for higher education institutions and learning, development, and assessment services for businesses and professionals.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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