Book publisher Courier (NASDAQ:CRRC) will report Q1 2007 financial results on Wednesday, Jan. 17. Here's a quick read on what to expect.

What analysts say:

  • Buy, sell, or waffle? There are only two analysts reading Courier cover to cover; one says buy while the other says hold.
  • Revenues. Revenues for the first quarter are expected to grow 13% to $65.6 million.
  • Earnings. Profits are expected to rise almost half as much, up 5.5% to $0.38 per share.

What management says:
Through a combination of organic growth and acquisitions, Courier was able to grow revenues 19% last year. It's currently the fifth-largest book publisher in the country based on sales, targeting religious, educational, and trade publications. It publishes Bibles, texts, and consumer books. If you've ever checked out the book section at Lowe's or Home Depot, you'll be familiar with some of the books of one of its latest acquisitions, Creative Homeowner.

According to Chairman and CEO James Conway, "This was an extraordinary year for Courier. Both segments of our business performed better than ever before, with healthy organic growth across all our markets." School text publishing was up 20%, as were test prep texts, while trade sales were up 17% through its Dover division, its largest publishing segment. Conway believes the acquisitions have rounded out the company, positioning it to be a "complete, vertically integrated book company."

What management does:
Gross profits have remained fairly consistent, while the acquisitions have caused operating margins to decline. The company benefited in the fourth quarter from the reversal of a tax accrual following an audit, though net income would still have improved by 25% over the previous year.

Margin %

09/05

12/05

03/06

06/06

09/06

Gross

33.4

33.3

33.4

33.0

33.0

Op.

15.4

15.2

15.1

14.8

14.9

Net

9.2

9.8

9.8

9.6

10.5
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Book publishing has been hit with some hard times, with publishers competing for consumers' shrinking attention span. Courier has found an interesting niche, though, by focusing on select markets like Bibles and study guides -- which never seem to go out of style. With the addition of Creative Homeowner, it adds a widely available brand of books that are offered in major retail outlets, including those "specialty" places like your local home improvement center.

Based on trailing earnings, Courier trades at a market multiple of 17. But with earnings set to grow at an average annual rate of 12% (excluding any gains from the tax accrual reversal for this fiscal year) over the next two years, its 2008 forward multiple of 16 might put it at a slightly higher value. Based on historical valuations, if its stock reached the low $30s, it might make an attractive buy.

Competitors:

  • Cadmus Communications (NASDAQ:CDMS)
  • Scholastic (NASDAQ:SCHL)
  • Educational Development (NASDAQ:EDUC)

Related Foolishness:

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.