On Friday, Madison Square Garden (MSG +0.00%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
As a premier entertainment venue, Madison Square Garden relies on the success of the teams that call it home. On that front, favorable news has boosted the business recently, and the stock has followed suit as investors take notice. Let's take an early look at what's been happening with Madison Square Garden over the past quarter, and what we're likely to see in its quarterly report.
Stats on Madison Square Garden
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| |
|---|---|
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Analyst EPS Estimate |
$0.33 |
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Change From Year-Ago EPS |
(17.5%) |
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Revenue Estimate |
$405.1 million |
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Change From Year-Ago Revenue |
1.2% |
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Earnings Beats in Past 4 Quarters |
4 |
Source: Yahoo! Finance.
Will Madison Square Garden win at earnings time?
Analysts have had mixed views in recent months on MSG's earnings, cutting $0.04 per share from their estimates for the just-ended quarter, but adding $0.17 per share to their full-year fiscal 2013 consensus. The stock has been shooting through the roof, with gains of 20% since late January sending the stock to a new all-time record high.
The big news for Madison Square Garden has been the success of its key sports franchises. The New York Knicks basketball team made the playoffs and earned the No. 2 seed in the Eastern Conference. Even more importantly, the long-delayed National Hockey League season finally got going in January, helping resurrect what many had feared would be a lost season, sending shares of MSG, as well as Canadian venue/team-owners Rogers Communications (RCI 8.15%) and BCE (BCE 3.66%), higher. As it turned out, MSG's New York Rangers made the playoffs and will go up against the Washington Capitals in the first round. Playoffs are an especially lucrative time for sports viewership, and usually translate into extra profits for the company's broadcast businesses.
But Madison Square Garden made some interesting business moves during the quarter, as well. In March, the company sold off the 3.9 million shares of Live Nation Entertainment that it owned, raising $44 million. The move raised eyebrows about a possible rift in the relationship with the Ticketmaster owner, but the stake was relatively small in MSG's overall portfolio of assets.
Sports media plays have become increasingly popular because of the escalating amounts of money that leagues have gotten from networks for their content. Rogers and BCE benefit from hockey being the most popular sport in Canada, but MSG's basketball presence gives it similar exposure within the U.S. market.
In MSG's earnings report, watch to see the company's plans for its Signature Suite level in the Garden. As MSG goes through the final phase of its renovations, it'll be essential for the company to post strong performance to justify the capital expenditures it made on its venue.
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