John Wiley & Sons (JW.A) is a publishing and research company offering scientific, technical, medical, and scholarly research journals, reference books, databases, scientific and education books, and test preparation services, explains income specialist Ben Reynolds, editor of Sure Dividend.
John Wiley & Sons’ competitive advantages are its leadership in the publishing and research industry, as well as its successful transformation into a digital, recurring revenue business model.
John Wiley & Sons’ focus on publishing research journals, scientific books, and similar items gives the company a positive growth outlook. Book sales have declined in the U.S. for the past decade.
But because John Wiley & Sons’ books and journals are for students, professionals, and scientists (not for entertainment) the company enjoys a steady recurring revenue stream.
Digital products accounted for ~75% of all revenues during the last year. Furthermore, John Wiley’s research segment has performed well in recent years thanks to growth from journal subscriptions and ongoing expansion in licensing & reprints.
The company has struggled more in its recent quarter with COVID-19 and related costs, but adjusted earnings-per-share still comfortably cover the company’s dividend.
Based on projected earnings power of $2.70 per share, John Wiley & Sons stock trades for a price-to-earnings ratio (P/E) of 12.9, below our fair value estimate of 17.0. An expanding P/E multiple could increase returns by 5.7% per year over the next five years.
Adding in the 4.5% annual earnings-per share and the 4.0% dividend yield results in total expected returns of 14.2% per year over the next five years.
