Nielsen Struggles To Recover From Eight-Year Low

With Thursday’s close on NYSE, Nielsen entered early after-hours trading on Wall Street at $23.46.  It’s one of the lowest closing prices Nielsen has seen this decade. Yet, analysts believe NLSN is overvalued, with the consensus recommendation of “Hold” on an issue that still has a 1-year target estimate of $27.94.

Is that realistic? Year-to-date, a $27.42 high was seen on March 21. Since then, Nielsen has stumbled, and on May 30 fell to as low as $22.36. By comparison, one year ago Nielsen was trading at $31.12.  Meanwhile, Simply Wall St. on Wednesday said “investors should think about this before buying Nielsen for its dividend.”

Was this “clickbait,” or legitimate advice?

“Nielsen Holdings likely looks attractive to dividend investors, given its 6.0% dividend yield and six-year payment history,” it said. “We’d agree the yield does look enticing. The company also bought back stock equivalent to around 0.5% of market capitalization this year.”

What’s Simply Wall St.‘s conclusion?

“We’re a bit uncomfortable with the company paying a dividend while being loss-making, although at least the dividend was covered by free cash flow,” it said. “Earnings per share are down, and to our mind Nielsen Holdings has not been paying a dividend long enough to demonstrate its resilience across economic cycles. Using these criteria, Nielsen Holdings looks quite suboptimal from a dividend investment perspective.”