John Wiley & Sons (JW/A) is in the knowledge business. This venerable company was founded in 1807 and has been a leading publisher of scholarly journals and textbooks. Wiley provides content and information services in the areas of scientific, medical, technical, and scholarly research; professional practice; and higher education.
The research business generates the majority of the company’s profits. Wiley is one of the top three research journal companies in the world, with 1,600 journal brands. Recurring revenue (through renewals) accounts for 80% of revenue in this division, and 85% of the journals are in digital form. The academic journal business historically has had limited competition, high renewal rates, and solid profitability. Wiley has done a good job of managing the transition from print to digital information. Despite pressure on academic institutions to control costs, this research business remains a solid one for Wiley.
The education and professional publishing division (books) is going through a difficult transition. The educational textbook market is declining due to a shift from print to digital books, as well as a shift to rental textbooks. Wiley has responded by working toward being an educational service business. It works with colleges and universities in providing program management and helping their transition to offering online courses.
Beyond its academic markets, the company is bridging the gap between education and employment, as it works with companies on human resource management and professional development, including online test preparation.
In addition to these new areas of growth domestically, Wiley has expanded outside the U.S. International revenue now accounts for about half of Wiley’s total.
We think that Wiley has adapted well to changing technology and will remain a market leader. The company has an excellent record of generating cash, keeping its businesses not only relevant but leading in its industry, and offering an attractive, growing dividend. The company has increased the dividend over the past decade at a 13% annualized rate. We consider the stock to be a core holding and estimate appreciation from current levels of 15–20%, on top of a dividend yield of almost 3%.
On the sustainability side of the company, we consider it to be a leader as well. It offers high-quality products and services to enhance learning. Wiley’s paper suppliers must have in place a comprehensive program of sustainable forest management certified by one or more recognized standards and use chlorine-free papers whenever possible. Efforts are underway to identify and measure sources of carbon emissions and make adjustments.
Wiley operates with a high degree of integrity in its editorial policies and overall governance practices. In sum, it offers investors a lesson in what a good business at an attractive price looks like.
John Wiley & Sons (JW/A)
Stock 52-week Low–High: $39.88–$65.50
Market Capitalization: $2.5 billion
Price/Earnings (2016): 14x
Projected 3–5-Year Annual Earnings Growth: 6%
Dividend Yield: 2.8%
Risk: Below average