NEW YORK (TheStreet) -- Shares of Meredith Corporation (MDP - Get Report) are down by 6.06% to $43.22 in mid-morning trading on Monday, after rival Nexstar Broadcasting (NXST - Get Report) offered $4.1 billion to purchase Media General (MEG) .
Earlier this month, Media General MEG agreed to purchase Meredith for $2.34 billion in a merger that would create the industry's third largest regional television station operator.
Nexstar is offering $10.50 per share in cash and .0898 shares for each Media General share, or approximately $14.50 per share.
The price of $14.50 a share represents a 30% premium from Media General's closing price on Friday.
Nexstar believes that it has the superior tie-up offer.
"It is illogical that Media General's Board has refused to engage with us and has instead pursued an ill-conceived and value-destructive acquisition of Meredith that would once again expose Media General shareholders to the risks of the low-margin publishing business," said Nexstar CEO Perry Sook.
Separately, TheStreet Ratings team rates MEREDITH CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate MEREDITH CORP (MDP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MDP's revenue growth has slightly outpaced the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- MEREDITH CORP has improved earnings per share by 5.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MEREDITH CORP increased its bottom line by earning $3.02 versus $2.50 in the prior year. This year, the market expects an improvement in earnings ($3.08 versus $3.02).
- The gross profit margin for MEREDITH CORP is rather high; currently it is at 61.89%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.99% trails the industry average.
- Compared to where it was trading a year ago, MDP's share price has not changed very much due to (a) the relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and (c) other mixed results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: MDP