Nielsen: Well-Positioned After Sale of Consumer Products Business

Steve Gorelik of Firebird Management presented his in-depth investment thesis on Nielsen Holdings (US: NLSN) at Best Ideas 2022.

Thesis summary:

Nielsen is the global leader in media audience measurement. The company’s “points” rating system is used as the de-facto currency for advertising pricing by brands looking to build long-term recognition with consumers.

The recent divestiture of the struggling consumer products business transformed Nielsen from a company with declining revenue to a mid-single-digit grower with improving profitability. The sale proceeds were used to delever the balance sheet, allowing Nielsen to deploy future cash flows into strengthening core business and shareholder returns.

The company is launching a new rating system in 2022 that will combine data from 100+ million digital devices and proprietary panels to offer advertisers a holistic view on digital transition and media consumption across devices.

Trading at a 7% FCF yield and below 8x EV/EBITDA, Nielsen is valued at one-third of the comparable companies whose products are used as third-party verification of data (FICO, Moody’s), providing an attractive medium-term investment opportunity.

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About the instructor:

In addition to being Head of Research at Firebird Management, Steve Gorelik is the Lead Fund Manager of Firebird U.S. Value Fund as well as portfolio manager of Firebird’s Eastern Europe and Russia Funds. He joined Firebird in 2005 from Columbia University Graduate School of Business while completing education from a highly selective Value Investing Program. Prior to business school, Steve was an operational strategy consultant at Deloitte working with companies in various industries including banking, healthcare, and retail. He holds a BS degree from Carnegie Mellon University as well as a CFA (chartered financial analyst) charter and a membership in Beta Gamma Sigma honor society. Steve serves on the boards of Georgia Beverage Holdings (Georgia), Arco Vara (Estonia), and Pharmsynthez (Russia). He speaks Russian, English and his native Belarussian.

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