Pearson PLC (ADR) (PSO), Scholastic Corp (SCHL), John Wiley & Sons Inc (JW.A): Getting a Read on the Prospects of Three Large Publishers

In the Global Education segment, sales of print textbooks fell 10% but revenues from e-book sales soared 144% and the WileyPLUS learning solution — an online teaching and learning environment — grew 25%. In the Professional Development segment, the story was the same: lower print book revenue offset by higher e-book demand. One of the problems the company cited regarding the drop in textbook sales was tight library funding.

John Wiley & Sons Inc (NYSE:JW.A)’s solution to soft demand for print products is to “accelerate the move to digital products.” It is also undergoing cost restructuring.

When I think of John Wiley & Sons Inc (NYSE:JW.A), the word prestigious comes to mind. In the STMS segment, they are able to command relatively high prices for their books because of the quality of the information and the status of authors as distinguished scholars and experts. These higher prices allow it to maintain higher margins. It also has higher than average pricing in its business and trade books.

What we’ve learned

Publishers understand that future growth will come from digital products delivered on multiple technological platforms at the consumers’ convenience. Consumers are still in the early stages of understanding — and making use of — the new information delivery platforms.

The developing countries need access to knowledge in order for their economies to continue to grow at a strong pace. Content-rich publishers are positioned to meet these needs.

Franchise fiction properties such as The Hunger Games can result in wild swings in profits.

Companies like Scholastic are making the consumption of information fun and interactive for kids.

Publishers are making strides in changing their cost structures so they can be more profitable in the future.

The stocks

Each of these companies has a remarkable, if unspectacular, consistency in their stock performance. Pearson PLC (ADR) (NYSE:PSO)’s 52 week range is $17-$20.50. A recent price is around $18.50, right in the middle of the range. Scholastic Corp (NASDAQ:SCHL) has a 52 week range of $25-$35. Current price? Around $30, right in the middle of the range. John Wiley & Sons Inc (NYSE:JW.A) has a 52 week range of $36-$52. The current price is towards the low end, $40. Could this company represent the best value?

The article Getting a Read on the Prospects of Three Large Publishers originally appeared on Fool.com and is written by Brian Hill.

Brian Hill has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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