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Linked here is a detailed quantitative analysis of Meredith Corp. (MDP). Below are some highlights from the above linked analysis:

Company Description: Meredith Corp. derives its earnings mainly from magazine publishing (primarily Better Homes and Gardens and Ladies' Home Journal) and ownership of 12 TV stations.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price

2. 20-Year DCF Price

3. Avg. P/E Price

4. Graham Number

MDP is trading at a premium to all four valuations above. Since MDP's tangible book value is not meaningful, a Graham number can not be calculated. The stock is trading at a 22.5% premium to its calculated fair value of $19.71. MDP did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout

2. Debt To Total Capital

3. Key Metrics

4. Dividend Growth Rate

5. Years of Div. Growth

6. Rolling 4-yr Div. > 15%

MDP earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. MDP earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1930 and has increased its dividend payments for 19 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.

2. Years to > MMA

The NPV MMA Diff. of the $1,111 is below the $1,600 target I look for in a stock that has increased dividends as long as MDP has. The stock's current yield of 4.23% exceeds the 3.6% estimated 20-year average MMA rate.

Memberships and Peers: MDP is a member of the S&P 500 a member of the Broad Dividend Achievers™ Index. The company's peer group includes: Martha Stewart Living (MSO) with a 0.0% yield, The McGraw-Hill Companies, Inc. (MHP) with a 2.2% yield and Scholastic Corporation (SCHL) with a 1.4% yield.

Conclusion:MDP did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of three Stars. This quantitatively ranks MDP as a 3 Star-Hold stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $26.06 before MDP's NPV MMA Differential decreased to the $1,600 minimum that I look for in a stock with 19 years of consecutive dividend increases. At that price the stock would yield 4.8%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,600 NPV MMA Differential, the calculated rate is 6.5%. This dividend growth rate is higher than the 5.2% used in this analysis, thus providing no margin of safety. MDP has a risk rating of 1.75 which classifies it as a Medium risk stock.

MDP operates in a highly competitive environment and lacks an economic moat. Licensing deals have allowed the company to leverage its strong brands into incremental and profitable revenue streams. Growth from non-political advertising is expected to slow within its print publications over the next five years. In addition, MDP is currently trading at a 22.5% premium to my calculated fair value of $19.71, so I will remain on the sidelines for now.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Disclosure: At the time of this writing, I held no position in MDP (0.0% of my Dividend Growth Portfolio). See a list of all my dividend growth holdings here.

Source: Meredith Corporation: Dividend Stock Analysis