On Tuesday of last week Bloomsbury Publishing (LON:BMY) issued a trading update for the year to end February 2019. It appears that the results, when announced on 21st May, will be up on both the company’s own and brokers’ expectations. And that will be despite continued expenditure on the fast-growing digital side of the international publisher of general and academic titles. It currently has over 63,000 titles in its backlist and publishes another 2,500 each year. It also now has over 20,000 titles being classed as ‘print on demand’.
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The compound annual growth rate for the digital resource side has been circa 20% for the last three years. The real growth and big returns from digital should come through ‘big time’ over the next couple of years. In the meantime, although it has several top-selling authors still publishing apace, it is the ongoing significant interest in Harry Potter and its various spin-offs that will really help to push profits.
Market estimates for the 2018/19 year are for revenue of £163m and pre-tax profits of nearly £14m, worth 14.5p in earnings. That could see a dividend of 7.9p per share. Current year sales of £173m should push up some £16m pre-tax, with earnings of 16.5p and a dividend of 8.3p per share. Estimates for the 2020/21 year suggest that £180m revenue could produce £17.8m in pre-tax profits, worth 18.5p per share in earnings and covering an 8.9p dividend.
As a very clear pointer that the group is really doing quite well, it was interesting to note that the trading update declared that the group saw strong cash generation with net cash of around £27m as at 28 February 2019 – well up on last year. (By the way, just how many companies do you recognise as having had 25 years of dividend growth?)
The shares of Bloomsbury Publishing, now 238p, look destined to trade up to and above their previous 270p highs – I see 300p an easy target by the end of this year.